By FXEmpire.com
Analysis and Recommendations:
The USD/CAD is trading at 1.0413 after the BoC announced that they were holding rates at 1% this morning, and more importantly, signal a more neutral tone. A somewhat more dovish statement is expected, but policy uncertainty and reasons for inertia will work against a full re-write. This is derived from three factors.
One is that the BoC has undergone several bias shifts since last summer and will be reticent to undergo yet another until it has a fuller case for doing so. This April’s hawkish slant was a re-write of the bias that carried the BoC through to the winter months on the expectation that headline inflation would drop to 1% by about now in part because that’s what oil futures contracts were suggesting. The April twist was premature on the hope that European risks had settled down and on upward revisions to 2012 Canadian growth that were then dashed.
The second factor is that significant binary event risk lies ahead that could go moderately ok or that could carry sharp adverse consequences for the global economy and markets such that the BoC may wish to ride out this period and see what happens. One is the Greek election on the 17th, and another is the fate of Spanish banks and any further proposals out of Europe.
The third factor is that the BoC is more likely to wait until the July 17th statement for a fuller bias shift if judged to be needed at that point since it will be more fully able to update its global macro forecasts in the ensuing Monetary Policy Report.
The USD gained momentum after the better then expected ISM non-manufacturing survey which offers another parallel to last year’s Q2-Q3 US economic swoon. One of the encouraging signs early last year had been the improvement of the ISM non-manufacturing survey from a reading of 52.4 in August 2010 to a high of 59 in February 2011… before collapsing in April and March essentially back to the levels from which it had started its run. Lo and behold, the ISM non-manufacturing seems to be following the same path this year. Having bottomed at the end of summer 2011 and given off a false hope of a recovery in January and February 2012, the ISM non-manufacturing survey is now essentially back to where it started its run, at a reading of 53.5.
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.
Economic Data for June 5, 2012 actual v. forecast
|
Date |
Currency |
Event |
Actual |
Forecast |
Previous |
|
Jun. 05 |
AUD |
Current Account |
-14.9B |
-14.8B |
-9.6B |
|
AUD |
Interest Rate Decision |
3.50% |
3.75% |
3.75% |
|
|
EUR |
Retail Sales (MoM) |
-1.0% |
-0.1% |
0.3% |
|
|
EUR |
German Factory Orders (MoM) |
-1.9% |
-1.0% |
3.2% |
|
|
Building Permits (MoM) |
-5.2% |
-2.0% |
4.9% |
||
|
CAD |
Interest Rate Decision |
1.00% |
1.00% |
1.00% |
|
|
USD |
ISM Non-Manufacturing Index |
53.7 |
53.5 |
53.5 |
Upcoming Economic Events that affect the CAD and USD
|
Date |
Time |
Currency |
Event |
Previous |
|
Jun 6 |
12:30 |
USD |
-0.5% |
|
|
14:30 |
USD |
|||
|
18:00 |
USD |
|||
|
Jun 7 |
12:30 |
USD |
383K |
|
|
14:00 |
CAD |
52.7 |
||
|
14:00 |
USD |
|||
|
Jun 8 |
12:15 |
CAD |
245K |
|
|
12:30 |
CAD |
58.2K |
||
|
12:30 |
CAD |
0.4B |
||
|
12:30 |
CAD |
7.3% |
||
|
12:30 |
CAD |
0.7% |
||
|
12:30 |
USD |
-51.8B |
||
|
14:00 |
USD |
Government Bond Auctions
Date Time Country
Jun 06 09:30 Germany
Jun 06 09:30 Portugal
Jun 06 14:30 UK
Jun 07 00:30 Japan
Jun 07 08:30 Spain
Jun 07 08:50 France
Jun 07 09:10 Sweden
Jun 07 15:00 US
Jun 08 10:00 Belgium
Jun 08 15:30 Italy
Click here a current USD/CAD Chart.
Originally posted here
