EUR Consolidates, CAD Data Next & Negative UK Econ Studies
Quiet trading that started in Asia continues into the London session. Currencies trade in narrow ranges near highs/lows reached on Friday after the disappointing labor market figures. EUR did not react to the slight increase in PPI. Market awaits Canadian data.
EZ April Producer Price Index increased slightly from previous 0.8% to 0.9%. Year over year reading came out at 6.7% vs. 6.6% expected which marked a decrease from previous 6.8%. EUR ignored this data and continued to consolidate Fridays gains.
Euro was equally uninspired by Social Democrats defeat of the ruling Socialist party in yesterdays Portugal election. Pledges that newly elected Social Democrats will honor austerity measures should provide support for the Euro over the short term.
New York session starts at 8:30 am EDT with Canadian April Building Permits that are expected to fall significantly from 17.2% to -2.3% followed at 10:00 am by Canadian Ivey PMI for May. Market is expecting an increase from 57.7 to 59.1. CAD has been lagging not only against EUR, GBP or AUD last week but also against the weak greenback. Negative surprise would therefore likely see a further depreciation of the loonie.
In the absence of US data, the market may react to a speech by Treasury Secretary Geithner who speaks at the International Monetary conference in Atlanta at 1:15 pm.
GBP has been unfazed by negative press commentary on the UK economy, raising the question on whether QE2 will be unavoidable. UK chancellor George Osborne has denied that a plan B is needed after several economists stated that the economy was too fragile to withstand his drastic spending cuts program. Nonetheless, Monday's Telegraph showed that 50 different economists back Osborne's spending cuts. Separately, the Sunday Times reported a study by Morgan Stanely that a double dip in UK housing was likely this year and next, trapping 1.3m homeowners in negative equity. MS's study also sees house declining 3% and another 7% in 2011 and 2012 respectively, erasing the the 10% gains made over the past 2 years,
Trading during this week is likely to be driven by interest rates decisions by RBA on Tuesday, RBNZ on Wednesday and BoE and ECB on Thursday. Analysts expect all central banks to hold rates steady.
Kile Morrison &
Virus Sends Stocks to 4th Worst Day in Past 9 yrs
by Adam Button | Feb 24, 2020 18:25
Gold Eyes 1680 ahead of G20
by Ashraf Laidi | Feb 21, 2020 18:08
3 Charts for GBP Traders
by Ashraf Laidi | Feb 21, 2020 13:18
Is Yen-Centric Risk Back?
by Adam Button | Feb 20, 2020 17:34
Why the Euro Keeps on Falling
by Adam Button | Feb 19, 2020 16:37