Intraday Market Thoughts

BOC Holds, Aussie GDP Up Next

by Adam Button
Dec 4, 2012 23:34

The Canadian dollar gained after the Bank of Canada held rates. The yen continues to retrace and it was the best performer on Tuesday while CHF suffers as Swiss banks begin charging negative rates. Australian GDP is the highlight of Asia-Pacific trading. See rest of last nights Premium Insights below. GBPUSD hits 1.6120, making 2/2 in GBPUSD for 4 consecutive weeks.

The Bank of Canada left rates unchanged at 1.00% for the 18th consecutive month, as expected. Officials retailed a slight easing bias but expectations for a hike within the next 12 months are nil. CAD strengthened after the release but it was more likely because it was playing catch-up with the commodity currencies rather than anything in the release.

CAD has been deep in the low-volatility doldrums for months but that may change this week. The government is contemplating whether to allow a Chinese-government-backed firm to takeover Canadian oil company Nexen. A decision is due by December 10 and it will have major implications for foreign investment and CAD.

Yen crosses continue to pare back this week after more than a month of strong gains. USD/JPY is in danger of breaking support at 81.70 and that may lead to a deeper correction. We warned about excessive bets against the yen.

US traders will get a relief from fiscal cliff-dominated trading for the remainder of the week due to higher profile economic data, beginning Wednesday with ADP employment.

AUD traders will be focused on todays GDP release. The consensus is for a 0.6% q/q increase (3.1% annualized). The spike after the rate cut announcement showed a deep underlying demand for the Aussie that is likely to persist.

Last nights NEW PREMIUM INSIGHTS edition went long AUDUSD despite anticipating the RBA cut, eyeing 1.05. Latest Insights also have new calls on EURUSD (2), GBPUSD (2), EURJPY (2), CADJPY (1), EURGBP (2), Gold (2), Silver (2), US Crude CL_F (2). DIRECT ACCESS here Non subscribers can click here:



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