GFX Morning FX Commentary May 2nd, 2012

Good Morning,

Today's expected range for the Canadian Dollar against the US Dollar is .9840-.9940

Today's expected range for the Canadian Dollar against the Euro is  1.2950-1.3050

Today's expected range for the Canadian Dollar against Sterling is 1.5950-1.6050

The US Dollar continues to grow stronger as Global fears of a recession continues to weigh on equity markets. This morning the Euro-Zone reported poorer than expected manufacturing data and Germany reported higher unemployment highlighting difficulties in the European economy. The Euro dropped from 1.3230 to trade at 1.3130,  the third day in a row the Euro has dropped against the Greenback. There is some speculation that the ECB will cut interest rates tomorrow to spur the EU economy, if they do cut rates I think that would pretty much send a signal to investors that the world economy is once again heading for a tough time.

The Canadian Dollar was all but ignored on world currency markets last night trading once again in a very tight range against the Greenback, helping the Loonie hold onto recent strength against the USD is the fact that the Loonie is very strong both against the Euro and Sterling as a result of weakness in those currencies, buyers of Euro and Sterling will want to start take advantage of these moves. With the jump in the US Dollar the past few days against the Euro it is not hard to imagine USD.CAD moving back higher and I would think that we could see it trade back above .9900 in the next few days, if not sooner. If you have not already done so US Dollar buyers may want to think about buying some USD on a forward basis as a hedge against USD.CAD moving higher.

Up today we get the US Factory Orders and ADP Employment reports which could bring some volatility to the market. The ADP private employers report is expected to show that the US created 170K new jobs last month, this report should set up the market for Friday’s all important US Department of Labor employment report. Investors will want to see that the US continues to create jobs in a recovery environment before they will take equities higher, a poor jobs report on Friday will hurt equities and give the US dollar a boost on the safe-haven effect.

Have a great day

Mike

GFX Morning Currency Rates
Wednesday, May 02 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		0.9864			0.9872
CAD/USD		1.0138			1.0129
EUR/USD		1.3138			1.3253
EUR/CAD		1.2965			1.3086
STG/CAD		1.5965			1.6001
AUD/CAD		1.0187			1.0185
CAD/JPY		81.35			80.87
CAD/CHF		0.9264			0.9176
CAD/HKD		7.8589			7.8569
CAD/CNY		6.3908			6.3875
CAD/MXN		13.1142			13.2066
Commodities
Gold		$1,652			$1,663
OIL		$105.63			$104.58
Option Volatility
Canada
O/N		10.46%			9.50%
1 Week		8.19%			8.00%
1 Month		8.22%			8.00%

USA
ADP Employment Report for April (08:30)
Factory Orders for March (10:00)

Canada
None