GFX Morning FX Commentary, June 7th, 2012

Good Morning,

Today’s suggested range for the Canadian dollar against the US Dollar is 1.0200 – 1.0275.

Today’s suggested range for the Canadian dollar against the Euro is 1.2870-1.3100

Today’s suggested range for the Canadian dollar against Sterling  is 1.5920-1.6050

The US Dollar is much weaker this morning as developments early this morning have had a dramatic effect on the currency markets. This morning the People’s Bank of China announced that they were cutting interest rates for the first time since 2008 in a move to bolster their faltering economy. This move is being seen as a very positive development and global equity markets have all jumped higher on the expectation that a strong Chinese economy will be good for business everywhere.

In other news overnight the Euro jumped higher as Spanish and French bond auctions were well received by the market and in the UK the Bank of England kept interest rates at 0.5% and did not add any stimulus to their economy, they will publish the minutes of their meeting in two weeks’ time.

EURO.USD traded to a high of 1.2600 and GBP.USD traded as high as 1.5570 so clearly a tough night for speculators that were long US Dollars and short the currencies, with record short positions in the markets I would say a lot of speculators have lost a lot of money this week.

The Canadian dollar should benefit from this Chinese development as currency speculators will bet that all commodity currencies will get stronger on higher demand for raw materials out of China. We initially saw before the announcement that USD.CAD looked like it was going to go back above 1.0300 but with this announcement and North American markets pointing much higher on the opening I now favour a move back towards 1.0200 now in the short-term. We should see enhanced volatility during the day so make sure you have your orders in to take advantage of these moves, tomorrow we get the Canadian jobs report so we should be in for a busy couple of days.

Have a great day

Mike

GFX Morning Currency Rates
Thursday June 7, 2012
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0292			1.0327
CAD/USD		0.9716			0.9683
EUR/USD		1.2562			1.2495
EUR/CAD		1.2933			1.2907
STG/CAD		1.5932			1.5998
AUD/CAD		1.0201			1.0184
CAD/JPY		77.05			76
CAD/CHF		0.928			0.9296
CAD/HKD		7.531			7.5055
CAD/CNY		6.1798			6.1611
CAD/MXN		13.6418			13.7024
Commodities
Gold		$1,615			$1,637
OIL		$84.62			$85.44
Option Volatility
Canada
O/N		13.50%			11.00%
1 Week		10.00%			10.00%
1 Month		10.00%			10.14%

Today's Economic Calendar

USA
Consumer Credit for April (15:00)

CANADA
None