GFX Morning FX Commentary May 31st, 2013

Good Morning,

Today’s expected range for the Canadian Dollar against the US Dollar is 1.0290-1.0370

Today’s expected range for the Canadian Dollar against the Euro is 1.3400-1.3475

Today’s expected range for the Canadian Dollar against the Sterling is 1.5700-1.5775

The US Dollar is mixed this morning as it is stronger against the Euro and weaker against Sterling and the Yen,  in Europe, the Euro fell to a three-week low as both Germany and the EU reported overall worrying economic news. In Germany, Retail Sales fell 0.4% from their levels in March which itself declined 0.1%, in the EU unemployment rose to 12.2% in March which I believe is a record high. It is not reported but I believe if you just factor in youth unemployment in the region it might be closer to 25%, these are very worrying number’s and will border on social upheaval if not addressed. You have heard me mention this before that I do not believe the current EU leadership has the necessary skills to solve this problem and matters should only get worse. If Merkel loses the election this fall in Germany then I think the situation will get very ugly in Europe, I read one report today on Bloomberg that is calling for EURO.USD to hit 1.21 (current 1.3000) in a year.

The Canadian Dollar is weaker against the US Dollar this morning but when you consider how other so called commodity currencies are foreign the Loonie is doing incredibly well, the South African Rand, Australian Dollar and New Zealand Dollar have all been hammered in recent weeks on fears that a slowdown in Global demand for commodities will hurt these economies. This is the main reason that I think US Dollar buyers should be looking at 1.0300 as a good level to put forward contracts on, if the Loonie decides to play catch up with these other currencies then we could see USD.CAD really jump higher.

Up today we get the Canadian GDP report for April and the first quarter. We are expecting a monthly growth rate of 0.1% and a quarterly annualized growth rate of 2.3%. Not numbers that will make the world stand up and take notice but if they disappoint the markets today look for USD.CAD to hit 1.0400 at some point, if they are positive I think we will see a slow grind back below 1.03000.

Have a great weekend

Mike

GFX Morning Currency Rates
Currencies	7:00am Today's Opening				Yesterday's Opening
USD/CAD		1.0344			1.035
CAD/USD		0.9667			0.9662
EUR/USD		1.2994			1.2983
EUR/CAD		1.3443			1.3441
STG/CAD		1.5729			1.5684
AUD/CAD		0.992			0.997
CAD/JPY		97.2			97.95
CAD/CHF		0.9218			0.9274
CAD/HKD		7.4848			7.4768
CAD/CNY		5.9276			5.9201
CAD/MXN		12.4759			12.2567
Commodities
Gold		$1,411.00			$1,400.00
OIL		$93.18			$92.71
US DOLLAR INDEX
P.CLOSE		83.05			83.67
OPEN		83.3			83.52