GFX Morning FX Commentary, May 11th, 2012

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is .9975-1.0075

Today's expected range for the Canadian Dollar against the Euro is 1.2970-1.3100

Today's expected range for the Canadian Dollar against Sterling is 1.6160-1.6280

The US Dollar is mixed across different currencies this morning as it appears four political parties in Greece have agreed to form a Government that will keep Greece in the Euro and poor economic data out of China have weighed on the commodity currencies and pushed USD higher on the safe-haven effect.

EURO.USD traded to a high of 1.2955 as it is rumoured that four of the parties in Greece are in final negotiations to form a coalition Government that would keep Greece in the Euro and honour the previous Government’s commitments. If this comes to pass then it should be a Euro positive and we will see EURO.USD trade above 1.3000 again.

Sterling is marginally weaker this morning as Consumer Confidence in the UK economy slipped once again. Earlier reports which showed the UK economy is in recession clearly are having an effect on the UK consumer, GBP.USD trades at 1.6100 and looks like it wants to go lower.

Overnight the Canadian dollar was weaker as USD.CAD moved higher on reports out of China that showed retail sales and industrial production were slowing, any perceived slowdown in China dampens investor demand for the commodity currencies (Canadian, Australian and New Zealand Dollars)as investors question the growth level in those countries.

Today's Canadian Dollar trading will be dominated by the Canadian Employment report where we are expecting some 10K new jobs to have been created in April after 80K new jobs were created in March. If the actual number is less than the expectation or if the March number is revised downward then I would expect the Loonie to weaken and USD.CAD will jump higher, if it is a strong report then USD.CAD should move back towards parity.

Taking the employment report out of the picture with the apparent formation of a pro Europe Government in Greece I would expect that this run above parity for USD.CAD to run out of steam and the Loonie should gain some strength back.

Have a great weekend

Mike

GFX Morning Currency Rates
Friday, May 11 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0049			1.0007
CAD/USD		0.9951			0.9993
EUR/USD		1.2933			1.2944
EUR/CAD		1.3001			1.2957
STG/CAD		1.6176			1.6155
AUD/CAD		1.008			1.0118
CAD/JPY		79.49			79.6
CAD/CHF		0.9235			0.9267
CAD/HKD		7.7235			7.754
CAD/CNY		6.2762			6.3064
CAD/MXN		13.4871			13.4579
Commodities
Gold		$1,581			$1,591
OIL		$95.95			$96.33
Option Volatility
Canada
O/N		8.07%			13.53%
1 Week		9.00%			10.50%
1 Month		8.95%			9.58%

Today's Calendar of Major Economic Releases

USA
Producer Price Index for April  (08:30)

CANADA
Employment Report for April (08:30) expectation is for 10k New Jobs and a slight increase in the unemployment rate to 7.3% from 7.2%