GFX Morning FX Commentary, May 16th, 2012

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is 1.0025-1.0125

Today's expected range for the Canadian Dollar against the Euro is 1.2820-1.2950   

Today's expected range for the Canadian Dollar against Sterling is 1.6040-1.6150

My apologies for the late arrival of the commentary, we had a very busy overnight session and I am just now catching with processing the overnight orders.

The US Dollar is again stronger this morning as the announcement yesterday afternoon that the Greeks were going back to the polls has weighed on global stock markets and driven the Euro lower. In Asia the Japanese Nikkei market is down over 1% and in China the Hang Seng market was down 3%, EURO.USD has traded to a new year low of 1.2680 and looks like it wants to go lower, clearly global investors are very nervous at the moment and the US Dollar will benefit. I was reading this morning that the next big fear is a run on the Greek banks as the population fears a banking collapse if Greece pulls out of the Euro, Bloomberg is reporting that some 700 million Euros have been withdrawn from accounts at Greek banks, if this continues and spreads it will be interesting to see what the European Central Bank does.

One thing to keep in mind is that markets rarely go in one direction for very long, every currency trader in the world is most likely short Euro and that to me is setting the market up for a short-term move higher for the Euro, keep any eye out for this , I think we will see the Euro pullback in the very short-term while the Greeks go to the polls and currency speculators may find it hard to make money.

The Canadian Dollar is finally under the pressure a stronger US Dollar (weak Euro) has given up some strength, USD.CAD is back trading near 1.0075. I would caution US Dollar sellers to consider doing some forward contracts at these levels, there still may be room for USD.CAD to go higher but each time over the past 6 months that USD.CAD has traded above 1.0100 level it quickly moved back to trade below par. The Greek situation should keep the Loonie under pressure in the short-term but if any polls show that the pro-austerity parties are gaining ground the Canadian Dollar should rally again.

Have a great day

Mike

GFX Morning Currency Rates
Wednesday, May 16 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.008			1.001
CAD/USD		0.99			0.999
EUR/USD		1.2712			1.2854
EUR/CAD		1.2841			1.287
STG/CAD		1.6074			1.606
AUD/CAD		1.0009			1.0007
CAD/JPY		79.55			79.77
CAD/CHF		0.9347			0.9329
CAD/HKD		7.6917			7.7554
CAD/CNY		6.2564			6.3085
CAD/MXN		13.7643			13.6699
Commodities
Gold		$1,535			$1,558
OIL		$92.36			$94.68
Option Volatility
Canada
O/N		15.94%			12.73%
1 Week		10.47%			9.61%
1 Month		10.47%			9.61%