| Technical Ranges
CAD, USD, EUR, GBP & JPY
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USD/CAD
Support: 0.9692
Resistance: 0.9801
CAD/JPY
Support: 84.42
Resistance: 83.25
EUR/CAD
Support: 1.3945 Resistance: 1.4078
EUR/USD
Support: 1.4360 Resistance: 1.4469
GBP/USD
Support: 1.5966 Resistance: 1.6070
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Overnight Orders
Currency Commentary
EUR, USD, CAD, GBP , JPY
EUR:
The Euro recovery from 1.4100 has extended on Wednesday above 1.4400, fuelled by confidence about the approval of austerity measures in Greek parliament, to retrace last week's decline and reach 1.4440 resistance area.
USD: This morning markets are on an upswing...weakening the USD...investors are confident the Greece scenario will improve..both equity and commodity markets are showing signs of this movement.
Later this morning, due out of the U.S....Pending home sales..if the data is positive..expect further fallback for the USD..if negative..expect a reverse trend.
Expect choppy trading ranges today...this will continue till the end of the week.
Due tomorrow.....Initial jobless claims data.
CAD:
Earlier this morning's CPI data out of Canada...gave alot of strength to the Loonie..along with oil rising. I agree with one of the economists..even thought the CPI numbers were very positive..the B.O.C needs to assess a rate hike and the economic risks...
As mentioned yesterday, the pair broke support @ 0.9801...and had fallen from down to 0.9779 prior to the CPI announcement. Since then, the pair dropped to 0.9701...and currently @ 0.9728..on a minor bullish trend..
Due tomorrow...another key piece of Canadian data due GDP.
Our clients are placing orders to buy @ mid 0.9700 and sellers @ higher 0.9700.
Today's expected range ...lower 0.9700 to 0.9800 lvls.
GBP: The Pound has advanced moderately during London's morning session, extending rebound from 1.5970 low at opening tomes to day highs at 1.6035 at the moment of writing, approaching 1.6050/65 resistance, the top of the last four days flat trading range.
JPY : The Yen has been one of the weakest currencies during the current week. The traditional safe haven Japanese currency is coming off recent highs against its main rivals as fears about default in Greece ease, and equity markets return to gains.
USD/JPY retreat from 82.20 in late May bottomed at 79.60, and the pair has been pushing higher during the last three days, reaching 2-week highs above 81.00.
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" What will Bank of Canada do now?? "....
" The increase in May was primarily a result of higher gasoline prices ".....
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Canada posted its highest inflation jump in eight years in May, and the stronger-than-expected rise now poses a dilemma for the Bank of Canada three weeks ahead of its interest-rate meeting next month.
Consumer prices were up 3.7% in May from a year earlier, Statistics Canada said Wednesday.
“Markets will be rethinking their very dovish view on Canadian interest rates,” CIBC chief economist Avery Shenfled said in a note.
Economists polled by Bloomberg had expected 3.3% annual inflation in May, the same as it was in April.
“The increase in May was primarily a result of higher gasoline prices,” Statistics Canada said in a statement.
Gasoline prices have been a driving force of inflation for several months. May marked the third-straight month for which annual inflation has been more than 3%, well above the Bank of Canada’s target rate of 2%.
Pump prices in May were 29.5% more than they were a year earlier. That’s the biggest leap since September 2005, when gas prices had increased in the wake of Hurricane Katrina.
Statistics Canada said gasoline prices in Canada are nearing the all-time highs reached in July 2008.
If not for gasoline, inflation would have been 2.4% in May, up from 2.2% in April.
The core inflation rate, which factors out volatile items such as energy and certain foods, was 1.8%. Economists had anticipated 1.%. It was 1.6% in April.
While the central bank aims for 2% overall inflation, it uses the core rate as a guide for assessing underlying trends.
The Bank of Canada’s overnight interest rate has been unchanged at 1% — a low level by historical standards — since last September. Low interest rates are known to be a factor in boosting inflation.
Article provided via the Financial Post
http://business.financialpost.com/2011/06/29/canadas-inflation-jumps/
" CAD- Canada CPI: What the economists say "..
" I think the B.O.C. is still focused on the economic risks "
Inflation surged in Canada in May to the highest rate since March 2003, to 3.7% annually from 3.3% in April, well above expectations and far above the Bank of Canada’s 2.0% target.
Here’s what the economists say:
CRAIG ALEXANDER, CHIEF ECONOMIST, TORONTO-DOMINION BANK
“It came in hotter than expected … if that was the only thing in this report, the markets would look past it, but the Bank of Canada core measure of inflation also ticked significantly higher than anticipated.”
“From the point of view of the Bank of Canada, I think this report will get markets thinking about a move by the Bank of Canada sooner than they had previously anticipated. Quite frankly, I think the BoC is still focused on the economic risks. As a consequence, today’s inflation report doesn’t change our thinking the Bank of Canada probably won’t move off the sidelines until January of next year.”
SHERYL KING, HEAD OF CANADIAN ECONOMICS, BANK OF AMERICA MERRILL LYNCH
“We were above consensus, and the numbers were even stronger than we were expecting. It’s a broad-based gain. It’s really telling us that there’s not very much supply in the Canadian economy and goes against the bank’s assertion that there’s a lot of excess supply in the economy.”
“It’s definitely going to keep the pressure on the Bank of Canada to continue to to normalize rates … suggests (the) Bank of Canada could raise rates earlier rather than later. I don’t think it will go in July. But it certainly puts September rate hikes on the table. What it would mean for the Canadian dollar is probably positive. The biggest takeaway is that there is not very much slack in the economy.”
DEREK HOLT, ECONOMIST, SCOTIA CAPITAL:
“Most of the gain was in the seasonally unadjusted figures. The seasonally adjusted prints were actually up only two-tenths month-over-month on headline and core. To me, we have to look at the seasonally adjusted numbers and they were disproportionately driven by a 2% rise in clothing and footwear. So controlling for the seasonal adjustments and the clothing component, I don’t see much of a fanning out of inflationary pressures here.”
MARKET REACTION:
- The Canadian dollar hit a session high, firming to $1.0280 shortly after the data, up from $1.0238 immediately before the data was released.
- Overnight index swaps, which trade based on expectations for the key central bank rate, showed that traders priced in an increased probability of rate hikes later this year following the data, though a full 25-basis-point rate hike was not priced in until 2012.
Article provided via the Financial Post
http://business.financialpost.com/2011/06/29/canada-cpi-what-the-economists-say/
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| Main USD/CAD data today: |
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1. USD - Pending home sales data.
2. CAD - CPI data.
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