GFX Morning FX Commentary

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0890-1.0940

Today's expected range for the Canadian Dollar against the Euro is 1.4600-1.4650

Today's expected range for the Canadian Dollar against Sterling is 1.8410-1.8460

The US Dollar is stronger again this morning as the overnight markets react to the very strong US GDP report yesterday. On an annualized basis ‎the growth rate jumped to 4.0% which was a lot higher than the expected growth rate of 3.0%. The Federal Reserve announcement actually took a bit of the shine off the dollar in the afternoon as it was slightly negative on inflation and the labour market. EURO.USD is now poised to break below 1.3400 as it also traded lower overnight on weaker German Employment data.‎

It was announced last night that Argentina is in a technical default due as a result of a US court ordered payment to some bond holders stemming from the default of 2001. The bondholders have not yet demanded payment of the missed payment from Argentina but the risk of default could push that country to the brink of bankruptcy once again. In the past year the Argentinian Peso has dropped 25% against the US Dollar and the fear is that inflation will run upwards of 40%. As of yet the financial markets are ignoring this but if it reaches crisis proportion it may have some spill-over effects

The Canadian Dollar had a rough day yesterday as it lost a lot of ground to the Greenback after the GDP report,. For US Dollar buyers you need to be ready to buy some forward contracts at current levels, the pressure is still building for a strong US dollar and there is no reason right now why we could not see USD.CAD at 1.10000 in the next few weeks.

Up today the volatility should continue when we get the release of the Canadian GDP report for May, we are expecting an annualized rate of 2.3% which is slightly higher than the 2.1% rate we saw in April. If the rate is widely different than expectation we will see some more volatility.

Have a great day

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0913			1.0866
CAD/USD		0.9163			0.8203
EUR/USD		1.3385			1.34
EUR/CAD		1.461			1.4564
STG/CAD		1.8429			1.8408
AUD/CAD		1.0147			1.0177
CAD/JPY		94.21			94.08
CAD/CHF		0.8326			0.8345
CAD/HKD		7.0793			7.1104
CAD/CNY		5.6547			5.677
CAD/MXN		12.1115			12.0492
Commodities
Gold		$1,296.00			$1,299.00
OIL		$99.55			$101.32
US DOLLAR INDEX
P.CLOSE		81.42			81.22
OPEN		81.48			81.3
US 10YR YIELD		2.55%			2.47%