Intraday Market Thoughts

The Ingredient That’s Always Missing

by Adam Button
Jul 7, 2014 23:38

Whenever a recovery begins to gather momentum it's always seems to falter on poor business investment. The Canadian dollar stumbled Monday after a BOC survey showed companies unwilling to invest. The upcoming session features Japanese trade balance, Australian business confidence and BOJ comments but a natural disaster threatens to steal the headlines.  

The Canadian dollar was the high flyer in Q2 after a round of robust economic data. The Bank of Canada said there were two elements that needed to fall into place – exports and business investment.

A recent survey showed better sentiment for exporters, likely due to CAD weakness but once again investment is nowhere to be found. The BOC business outlook survey showed disappointment intentions and that will give Poloz a reason to maintain a slightly dovish tone next week.

The Canadian dollar struggled after the report and it weakened further after the June Ivey PMI fell to 46.9 from 48.2. The market was expecting a rise to 52.0 but this could be an early indication that the rebound in the loonie is already hurting Canadian manufacturers.

The overall tone in markets was risk aversion and US dollar softness. The excitement from non-farm payrolls has quickly faded and USD/JPY has given back all its gains.

Looking ahead to Asia-Pacific trading, the main headline will be the May Japanese trade deficit at 2350 GMT as it's expected at 822 billion yen from 780 billion in April. Other headlines include NAB Australin business confidence at 0130 GMT and comments from the BOJ's Nakaso at 0345 GMT.

The main story, however, could be Typhoon Neoguri as the Category 5 storm bears down on Okinawa on Tuesday morning followed by the main island that night. The typhoon path is well-prepared for storms but flooding and damage could prompt some repatriation of funds.

The event to watch later is Swiss CPI, as Ashraf wrote about earlier. 

As Switzerland flirts with disinflation, we issue a new CHF note ahead of tomorrow's key data on Swiss CPI and retail sales, which will be watched by SNB, whose Governing Council member Zurbruegg issued a warning two days ago. We also issue a new AUDUSD ahead of this week's key Aussie jobs data.
Act Exp Prev GMT
CPI (JUN) (m/m)
0.1% 0.3% Jul 08 7:15
CPI (JUN) (y/y)
0.2% 0.2% Jul 08 7:15
Retail Sales (MAY) (y/y)
1.8% 0.4% Jul 08 7:15
Ivey PMI (JUN)
49.7 52.2 Jul 07 14:00
Ivey PMI s.a (JUN)
46.9 52.5 48.2 Jul 07 14:00
NAB's Business Confidence (JUN)
7 Jul 08 1:30

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