CAD Posts on Forex Blog
FX Preview July 20 - July 25
Jul 19, 2008
This is a light weak for market data, with the most interesting reports coming out of:
Australia (PPI on Sunday, CPI Tuesday)
Canada (Retail Sales Tuesday and PPI Wednesday)
UK (BOE minutes Wednesday, Retail Sales Thursday, and Q2 GDP Friday)
Be careful getting long AUDUSD as the breakdown in oil and gold could spell trouble for the commodity based Aussie. I would stay long AUDNZD as that play is based on the comparative directions of the 2 economies.
Earnings from several regional banks and a possible diplomatic deal with Iran could be the biggest market movers for the USD.
I will be taking the next week off. Have fun trading!
Sunday July 20
9:30pm Australian PPI (expect 1.6% QoQ, 5.3% YoY)
Monday July 21
3:15am Swiss Producer and Import Prices (expect 0.5% MoM, 4.4% YoY)
time not listed Bank Of America Earnings (expect 0.53 a share)
Tuesday July 22
2:15am Swiss June Trade Balance (expect 1.6 billion)
4am Italy Trade Balance
8:10m US treasurer Hank Paulson Speaks
8:30am Canadian Retail Sales (expect 0.5% MoM)
9:30pm Australian CPI (expect 1.3% QoQ, 4.3% YoY)
time not listed Bank of Florida earnings (expect -0.01 per share)
after market close Etrade earnings (expect -0.14 per share)
after market close Washington Mutual earnings (expect -1.05 a share)
Wednesday July 23
4am Italy Retail Sales (expect 0% MoM, -0.4% YoY)
4:30am Bank of England minutes from last policy meeting
7am Canadian PPI (expect 0.5% MoM, 2.9% YoY)
7am Canadian PPI Core (expect 0.1% MoM, 1.6% YoY)
10:30am US Crude Inventories
5pm Reserve Bank of New Zealand Rate Decision (expect hold at 8.25%)
Thursday July 24
4am German IFO Survey (look for weakness mirroring the ZEW Survey last week)
4am Eurozone Current Account
4:30am UK Retail Sales (expect -2.2% MoM, 4.4% YoY)
10am US Existing Home Sales (expect 4.97 million)
7:30pm Japan CPI July
Friday July 25
4:30am UK Q2 GDP (expect 0.2% QoQ, 1.6% YoY)
8:30am US Durable Orders (expect 0%)
10am US New Home Sales (expect 507k)
10am US Michigan July Consumer Sentiment Finalized (expect 56.3)
time not supplied T Rowe Price earnings (expect 0.60 per share)
BOE, CAD, AUD, upcoming reports, RBNZ, Ifo, Pound
Assessing FX Trades After a Crazy Day in America
Jul 11, 2008
Unless you have had your head buried in the sand, the multiple crises of the day have not escaped you attention.
On the one hand, we have a continuing credit crises in America, (Fannie, Freddie, and Lehman Bros). On the other hand, we have major global political instability (Iran, Nigeria, likely Sudan indictment, failed Zimbabwe sanctions, Russia trying to buy Libyan oil).
So what is a forex trader to do?
Going long the Euro seems like a safe heaven. But did it move on Euro strength, or perceived Dollar / Pound / Yen weakness? I think the answer is the latter.
So what trades do we take on?
At the end of the day, FX prices are largely determined by 2 factors - interest rates and economic outlook. So let's take a look at these 2 factors compared to some of the majors.
USD - Interest rates remain low. And after this week, it is hard to believe the Fed will raise rates in the next few meetings.
OTOH, jobs, trade balance, and the preliminary Michigan consumer sentiment all beat expectations. It is far too soon to have a rosy outlook on the economy, perhaps a slew of earnings next week will help establish some clarity on that factor. Merril, Citigroup, JP Morgan, Intel, and Google will report earnings.
EUR - Trichet has 'no bias'. Several prominent Euro finance ministers and the vice president of the ECB have stressed the need for a balancing of growth and inflation. One can not say with any definitive certainty that interest rates will rise.
On the economic front, the situation continues to deteriorate (though nowhere near as fast as in the US). Trade balances disappointed this week. Production and confidence is falling.
The currency will almost certainly pass 1.61 in the next week, but beyond that the future is uncertain.
GBP - Interest rates remain at 5%. However, many traders and economists actually speculated they would cut rates at their meeting on Thursday, despite their inflation problems.
Like the US, their economy is struggling amidst a credit crunch. Housing continues to fall. Relative to the US, housing may prove to be a bigger problem for the Brits, as they have a higher percentage of toxic debt, and more personal indebtedness.
AUD - Interest rates remain at an astounding 7.25%. And speculators constantly suggest the bank may still raise rates again.
This week, jobs come in positively at almost +30k, wiping out last month's losses. Overall, the economy seems to be humming along. And why shouldn't they? China and India have been great export customers in a commodity driven environment.
NZD - While interest rates remain high, pressure is building for cuts. They certainly won' raise rates anytime soon.
On the economic front, things are worsening as they too suffer from a decline in housing, reduced consumer confidence, and a declining trade balance.
CAD - Interest rates remain stable at 3%, and are unlikely to change next week. That they did not cut as expected by many last month suggests their bias may be to raise rates. Look for any BoC comments next week for guidance.
On the economic front, they continue to do well. Being a large oil exporter with these record prices certainly doesn't hurt. Building permits and trade surprised to the upside this week.
JPY, CHF - No comment.
By my assessment, long term trades should focus on:
go long the AUD and CAD.
short the GBP and NZD.
avoid EUR and USD for anything but short term scalps as their is distinct lack of clarity.
My recommended trade would be long the AUDNZD
CAD, trade balance, AUD, fundamental, EUR, GBP, USD
Inflation a Global Concern - Canadians Hold at 3%
Jun 10, 2008
The Bank of Canada joined a global chorus of inflation fears today, holding rates steady at 3%. Most traders had forecast a 25bps cut after the last 2 policy meetings featured 0.5% rate cuts and April inflation came in below 2%. But the writing is on the wall as the Bank stated:
"If current levels of energy prices persist, total CPI inflation will rise above 3% later this year...Against this backdrop, the bank now judges that the current stance of monetary policy is appropriately accommodative to bring aggregate demand and supply into balance and to achieve the 2% inflation target. There continue to be important downside and upside risks to inflation in Canada, which the bank will monitor closely."
The BOC joins the US, Euros, and Brits on warning of impending inflation concerns. New Zealand alone seems likely to cut rates in the near future among the major currencies.
Interestingly, Axel Weber of the ECB seemed to soften his tone from the previous week. At a speech in England, he stated that a mild winter may have exaggerated Q1 growth. Last week he was a Euro bull, repeatedly stressing the ECB was seriously considering a 25bps rate hike in July. German Q1 GDP growth came in at 1.5%, thanks in large part to unusual construction spending according to Mr. Weber.
With the recent wave of central bank warnings - watch for an interesting G8 Finance Minster meeting this weekend. The meeting, in Osaka Japan, kicks off on Friday June 13th at 7pm local (3am est). Since Forex markets will still be open, Cash does not expect a major announcement until Saturday At 1:30pm local Saturday (9:30pm est Friday), will be the Chairman's press conference. Given the spike in oil and chatter of central banks recently, it may be worth getting to the bar later than usual Friday.
Loonie, CAD, inflation, G8, interest rates
Tidbits Under the Radar
Jun 6, 2008
I won't recap the events of today - just about every news outlet has reported the record rise in crude, the jump in unemployment, and 3% drop in US equities.
With those events dominating headlines, several nuggets of information may have slipped by.
1. German industrial production fell 0.8% in April and factory orders contracted for a 5th month.
2. The French April Trade Balance balance beat expectations, coming in at -€3.7 billion vs the expected €-4 billion reading.
3. The CAD and NZD moved weakly against the greenback The NZD can be explained by the RBNZ comments Thursday. The CAD weakness may indicate that forex traders anticipate a rate cut from the Bank of Canada. The interest rate currently stands at 2.75%, and may be cut 0.25% on Tuesday.
4. US wholesale petroleum inventories jumped 8.8% in April. Additionally, March inventories fell less than previously reported. The March drop of 5.6% was revised higher to 4.5%
5. The 6 member Gulf Cooperation Council will meet Monday to discuss technical issues related to the proposed monetary union in 2010. Oman has already indicated it will not join the union.
Loonie, CAD, NZD, oil, Kiwi
Loonie Trouble Ahead?
Mar 22, 2008
David Olive suggests their are 5 reasons the Loonie may be in trouble.
1. Commodity prices are expected to fall. So far, high prices for Canadian oil, natural gas, wheat and other commodities has spared Canada. As the US slow down continues, commodity prices are expected to fall.
2. The Credit Crunch. Since January 07, the world's largest banks have written off 81 billion. As a result, banks are holding onto cash, distrust of collateral, and reluctant to loan. A credit crunch crimps global economic growth, including Canada.
Read more at thestar
Loonie, CAD, Credit Crunch
