5 June 2012 14: 03 GMT the Central Bank to take: Canada maintains its reference to 1.00% rate > the global growth Outlook weakened while Canadian growth is less balanced and Inflation is Well-anchored > CAD slips against major peers


When monetary policy meeting today, the Bank of Canada decided to maintain the interest rates to 1.00% for the thirteenth time in a row, extending its longest break since the 1950s. The target rate has remained unchanged since September 2010, after three consecutive increases of 25% 0.25 basis points. Decision of the Bank of the Canada rate was not surprised the market that it corresponded to the median projections of Bloomberg News survey. The discount rate is proportionally 1.25% and the deposit rate is 0.75 per cent.
The Bank cited weak prospects for global growth and domestic growth slower than expected as the main reasons to defer interest rates increase. As the Bank released its April monetary policy (MPR) report, the global economiccondition has deteriorated in recent weeks. Risks around the European crisis has intensified, including political unrest in Greece and its possible exit of Euro, the fears of banking crisis in Spain and the threat of contagion of debt in the euro area. In addition, the American economy continues recovery at a modest pace and especially in emerging market economies have slowed.
At last Friday's GDP report showed that the economy expanded at an annualized rate of only 1.9% to 2.5% Central Bank forecasts and has remained unchanged since the fourth quarter, growth. The composition of growth has become "less balanced" housing activity is stronger than expected but households continue to add to their burden of debt the modest revenue growth.On the price front, inflation appears to have entered a period of stability with the basic price index should be the objective of 2% of the Bank.
The Bank reiterated in his statement that "persistent force currency" dollar Canadian has been an ongoing challenge for tenth largest economy from domestic currencies of the world reduces foreign demand and hurt net exports. Responsible Canadian policies have continued to support wait them and observe everything to agitate on any withdrawal of this stimulus considerable of monetary policy in economic expansion continues and excess supply is gradually absorbed. "The calendar and the degree of any withdrawal will be"weighted carefully"against national and global economic developments", pointed out the Bank.
Chart 1-minute USDCAD: 5 June 2012
Graph created with strategy trader - prepared by Trang Nguyen
In the minutes following the decision of the Bank of Canada rates, the Canadian Mint immediately reduced gains against its major currencies. As is the 1-minute chart above, the pair USDCAD removed about 40 pips 1.0375 1.0420 within five minutes. Apparently, current weakness in the global economy and stable inflation curbing speculation on if interest rates increase soon. During the writing of this report, the New Zealand dollar was transferred to $1.0375
-Written by Trang Nguyen, DailyFX research team of DailyFX.com
Contact Trang, by e-mail at tnguyen@dailyfx.com
DailyFX provides news forex and technical analysis on trends affecting the world market currencies.
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5 June 2012 14: 03 GMT

.. Loonie Mixed as Canadian Retail Sales Rebound, Leading Indicators Advance

23 May 2012 13:48 GMT THE TAKEAWAY: Canada Retail Sales Bounced 0.4 Percent, Leading Indicators Rose 0.3 Percent> Positive Signal for Economic Growth Coming to the Middle of the Year > CAD Mixed
Retail Sales
Canadian retail sales rebounded more than forecast in March after February pullback, fueled by higher sales in motor vehicles, clothing, sporting goods, building material and garden equipment.
Sales in retail stores rose 0.4 percent to a seasonally adjusted C$39.05 billion in March, Ottawa-based Statistics Canada reported today. The print was higher than economist’s projection of 0.3 percent gain, according to Bloomberg News survey. The less volatile figure, excluding auto sector, modestly edged up 0.1 percent in Marchcompared to 0.5 percent increase widely predicted.Meanwhile, December’s reading was revised downwardly to a gain of 0.4 percent from a surge of 0.5 percent initially reported.
Gains were recorded in seven of eleven major categories that account for fifty-six percent of total retail sales in March. Sales at motor vehicle and parts dealers surged 1.2 percent as a result of 0.7 percent increase in receipts at new car dealers and 7.7% advance at other motor vehicle dealers. Similarly, building material and garden equipment posted 1.8 percent rise, a second consecutive monthly gain. Clothing and clothing accessories store sales also edged up 1.3 percent, largely attributable to 7.2 percent increase at shoe stores.
Regarding to region, retail sales climbed in four of thirteen major provinces in March. Most of gains were concentrated in Ontario (+1.2%) due to warmer than usual weather. On the contrary, News Brunswick registered the biggest decline of 1.5 percent.
Leading indicators
Another report issued by Statistics Canada at the same time showed that the Canada’s composite leading indicators rose for the tenth straight month in April on substantial improvement in housing sectors. The index surged 0.3 percent last month, matching with consensus forecast from Bloomberg Survey. Meanwhile, March reading was downwardy revised to a gain of 0.3 percent from an advance of 0.4 percent initially estimated.
The composite leading indicator comprised of ten components which significantly affect cyclical activity in the economy and together represent major categories of Gross Domestic Product. Seven of ten components registered gains in April compared to eight in the previous month.
Housing index advanced 3.5 percent, mainly contributed to the gain in April leading indicators. The financial components remained positive, as did employment in services. In contrast, manufacturing components deteriorated. New orders fell for the second month in the row (-1.2%) while the ratio of shipments and inventories have flatted.
USDCAD 1-minute Chart: May 23, 2012

Chart created using Strategy Trader – Prepared by Trang Nguyen
The Canadian dollar was traded mixed ahead North American session today as the loonie strengthens versus high-yielding currencies (Australian dollar, New Zealand dollar) but weakens versus safe-haven currencies (U.S. dollar, Japanese yen and Swiss franc). As can be seen from the 1-minute USDCAD chart above, the loonie immediately weakens 20 pips versus the greenback in the minutes following the retail sales and leading indicator reports. Nonetheless, the loonie quickly saw correction after ten minutes and edged 35 pips higher to $C1.021 per U.S. dollar.

Loonie Remains Strong after Canada's April Inflation Rose More than Forecast

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By Trang Nguyen, 18 May 2012 13: 34 GMT THE TAKEAWAY: Canada Consumer Price Index Rise 0.4 Percent in April > the Inflation within Target Encourages Bank of Canada to Preserve its Low Interest Rate Policy throughout 2012 > CAD Remains Higher

Canada's inflation remained stable at 0.4 percent in April for the fourth straight month as rising price pressures on cars and clothing offset easing pressures on energy and gasoline.

Canada Consumer Price Index is at a current level of 122(2), up 0.4 percent from121.7 in the previous month, the Ottawa - based Statistics Canada reported today. As such, the consumer prices remained stable at 0.4 percent for the fourth straight month. The reading exceeds 0.3 percent gain projected, according to the Bloomberg News survey. Over a year prior, the all items index regained to 2.0 percent from 1.9 percent in March.

The rise in year-to-year cost of energy substantially softened to 1.1 percent in April, following 5.1 percent increase in March and 7.2 percent upsurge in February. Similarly, gasoline prices climbed only 3.3 percent last month compared to 6.6 percent and 8.9 percent in the previous two months. Meanwhile, transportation costs surged 3.2 percent in the twelve months to April while the food prices advanced 2.5 percent.

The Bank of Canada's core index rose 0.4 percent on monthly basis and gained 2.1 percent on yearly basis. Those numbers are consistent with the Bank of Canada's forecast last month that consumer prices would advance average 2 percent this quarter and 2.2 percent in the second half of the year.

USDCAD 1-minute Chart: May 18, 2012

Chart created using Strategy Trader - Prepared by Trang Nguyen

The Canadian dollar gains ground versus most of its major counterparts ahead of an opening bell in North America trade today. The loonie immediately extended advance in the minutes following the Consumer Price Index report. Canada's April inflation meets its central bank target of 2.0 percent, thus indicating low chance of rate hike in near term. As seen from the 1-minute USDCAD chart above, the currency pair fell about 30 pips from 1.0160 to 1.0140. Nonetheless, the greenback quickly saw a correction after thirty minutes, trades at $1.0166 at the time this report was written, higher than its level before the data release.

-Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

To contact Trang, email tnguyen@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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18 May 2012 13: 34 GMT

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! Loonie Falls Despite Surge in April Housing Starts To Fastest Pace Since 2007

THE TAKEAWAY: [Canadian housing starts accelerated in April for fifth straight month to fastest pace since September 2007] > [Continuing strength in housing market] > [CAD weakens vs. USD]
Housing starts in Canada unexpectedly accelerated in April for the fifth straight month to its fastest pace since September 2007. The Canada Mortgage and Housing Corporation reported a large jump to 244,900 housing starts at a seasonally adjusted annual pace in April, while March’s figure was revised slightly downwards to 215,200 from 215,600 originally reported. The median forecast of 21 economists surveyed by Bloomberg News had called for a slowdown to 204,000 housing starts in April. New starts soared by 28.8 percent in April from a year ago, compared with March’s year-on-year rate of 16.7 percent.
The pickup in housing starts in April was led by a surge in multi-family homes in urban areas, which recorded a 27.4 percent gain to 158,500 new starts. Meanwhile, housing starts in rural areas contracted by 19.0 percent from a month ago, reversing the 10 percent gain in March.
April's housing starts data follows yesterday’s news that the number of residential building permits approved had declined by 1.3 percent in March. This could indicate that we may see slight moderation in the coming months in the recent strength shown by the Canadian housing market, in what some analysts think is a housing bubble.
USDCAD 1-minute Chart: May 8, 2012

Chart created using Strategy Trader – Prepared by Tzu-Wen Chen
Despite the stronger-than-expected print, the Canadian dollar tumbled against the U.S. dollar in the minutes following the data release. The loonie fell as much as 20 pips in the first 15 minutes from pre-announcement levels, and despite a slight retracement, continued to trade weaker at C$0.9972 against the greenback at the time of this report.

"!" Loonie Extends Decline as April Ivey PMI Hits 9-month Low

04 May 2012 14:52 GMT  THE TAKEAWAY:Canada Ivey Purchasing Managers Index Fell to 52.7 in April> Lower Employment, Supplier Deliveries and Prices Levels > CAD Extends Loss vs. Major Peers
Purchasing activity in the Canadian economy expanded at the slowest pace in nine months in April amid weaker employment gain, lower price pressures and drop in supplier deliveries.
The Canadian Ivey Purchasing Managers Index (PMI) disappointedly fell to 52.7 on a seasonally adjusted basis in April from 63.5 registered in March, the Purchasing Management Association of Canada and the Richard Ivey School of Business jointly reported today. The reading was significantly meager compared to April 2011’s 57.8 and April 2010’s 59.0. The print also falls short of consensus forecast of 61.0 from Bloomberg News survey. Figures over 50 indicate expansion; otherwise values below 50 signify contraction.
Ivey Employment Index for April slightly decreased to 52.2 from March’s 52.7, pointing to weaker employment gain last month. Canada’s unemployment rate fell to 7.2 percent in March from 7.4 percent in February. Yet, analysts have expected the jobless rate to climb again to 7.3 percent last month. Besides, price pressure continued to cool down with the prices index standing at 60.3, the lowest level since August 2010. Persistent strength of the local currency caused additional downward pressure on Canadian inflation.
Ivey Supplier Deliveries Index dropped to 47.4 last month from 48.8 in March, indicating that deliveries were slower than February. In contrast, inventories unexpectedly jumped back a positive territory with the sub-index expanding at 56.8 in April after contracting to 45.7 in the previous month.
USDCAD 1-minute Chart: May 04, 2012

ay 04, 2012

Chart created using Strategy Trader – Prepared by Trang Nguyen

Canadian dollar loses ground versus most of its major peers except higher-yielding currencies (Australian dollar and New Zealand dollar) in the North American morning trade today as dismal U.S. employment report dampens risk appetite. The loonie immediately extends loss versus its major peers in the minutes following the weaker-than-expected Ivey PMI report. As seen from the 1-minute USDCAD chart above, the greenback advanced 30 pips against the loonie, rising to the session high of $C0.9940 from $C0.9910. The Relative Strength Indicator crossing above 70 indicated that market participants have been cutting their loonie holdings in favor of the reserve currency.

*** Loonie, Sterling March Higher Against US Dollar on Strong Data

20 April 2012 14:00 GMT  Fundamental Headlines - Europe Urged to Fix Crisis as G-20 Warns of More Stress – Bloomberg
- Nine U.S. Banks Said to be Examined on Overdraft Fees – Bloomberg
- Global Growth Seen Subdued, Still Heavily Reliant on Asia – Reuters
- Poll Frames Rivals’ Strengths – WSJ
- Volume Equals Validity – WSJ
European Session Summary
Despite some risky headline events that have triggered swings in volatility throughout the week, price action was relatively muted in the overnight with most of the majors trading in narrow ranges against the US Dollar. The leg up in risk-tolerance really took off at the end of trading in Asia, when higher yielding currencies and risk-correlated assets, like the Australian and New Zealand Dollars, were trading near their session lows.
With the G-20 meetings ongoing in Washington, much attention has been drawn to how much additional funding the International Monetary Fund can collect from its members. While no official number has been reported, the early estimates suggest that an additional $400 billion will be donated to what has become the unofficial “save Europe” fund, a concern raised by Canadian Finance Minister Jim Flaherty.
Mr. Flaherty said that “Given that the major challenge here is a sovereign debt challenge in euro zone countries, and that euro zone countries are asking non euro-zone countries to contribute to resources at the IMF, our view is that there ought to be two votes.” Mr. Flaherty’s view is likely to be popular among the BRICS – Brazil, Russian, India, China, and South Africa – who are weighing whether or not to contribute to the fund and what size contribution. If Mr. Flaherty had his way, European countries would have less of a say and emerging market economies would have a greater representation.
Beyond the meetings, the notable performances in the Asian and European sessions go to the British Pound and Canadian Dollars, which have been riding a wave of strong data in recent days. For both currencies, this week marked a shift in policy seeing how both the Bank of England and the Bank of Canada have started to take on more hawkish positioning. The Bank of England has fewer members voting for more easing; and the Bank of Canada has suggested it may soon be time to withdraw stimulus from the market. Today, strong British retail sales data supported the Sterling, while inflation data has boosted the Loonie on rising rate hike expectations.
Taking a look at credit, the PIIGS were generally skewed to the downside, but for Portugal, whose 2-year note plunged 36.9-basis points to bring the yield down to 8.448 percent. Spanish borrowing costs were relatively higher, with the 2-year note fetching 3.389 percent. Irish debt was the worst performing on the short-end of the curve, losing 9.9-basis points to 4.525 percent on the 2-year note.
EURUSD 5-min Chart: April 20, 2012

Charts Created using Marketscope
Overall, the Swiss Franc (?) was the best performing major currency, tracking the highly correlated Euro which was the second best performer, each gaining 0.44 percent and 0.42 percent, respectively. All of the other majors, but for the Japanese Yen, which was down 0.06 percent, had rallied against the US Dollar through two sessions on Friday.
24-Hour Price Action
Key Levels: 12:55 GMT

Thus far, on Friday, the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) is trading lower, at 9931.74 at the time this report was written, after opening at 9955.15. The index has traded mostly lower, with the high at 9965.33 and the low at 9928.29.

Loonie Remains Strong as Canadian CPI Softened, Leading Indicators Advanced in March

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THE TAKEAWAY: Canada Consumer Price Index Increased 0.4 Percent on Monthly Basis and 2.0 Percent on Yearly Basis in March, Leading Indicators Rose 0.4 Percent> Soft Inflation may Encourage Bank of Canada to Preserve its Low Interest Rate Policy throughout 2012>CAD Remains Higher

Consumer Price Index

Canada’s inflation has softened in March on slower price pressures for food and energy, dampening expectations for a rate hike in near term.

The consumer price index advanced 0.4 percent last month, following 0.4 percent rise in February, the Ottawa-based Statistics Canada reported today. The reading fell short of 0.5 percent gain anticipated,according to the Bloomberg News survey. Over a year prior, the all items index fell back to 2.0 percent from 2.6 percent in February. This 0.7 percentage point difference was mainly triggered by slower year-over-year increases in prices for food and energy.

The year-to-year cost of energy mounted 5.1 percent in March, following a 7.2 percent gain in the previous month, among which gasoline prices eased to 6.6 percent last month after climbing 8.9 percent in February. Electronic costs increased 5.3 percent compared to 8.7 percent in the prior month. Meanwhile, the food prices advanced 2.2 percent in the twelve months to March, after surging 4.1 percent in February. This slower increase was the result of month-over-month decline in food prices last month.

The Bank of Canada’s core index rose 0.3 percent on monthly basis and gained 1.9 percent on yearly basis. Year-over-year price pressured eased in March mainly due to slower price increases for electricity and price declines in woman’s clothing.

Leading indicators

Another report issued by Statistics Canada at the same time today showed that the Canada’s composite leading indicators rose for the ninth straight month in February on improvement in financial and housing sectors. The index surged 0.4 percent last month amid consensus forecast of 0.5 percent gain from Bloomberg News survey. Meanwhile, February reading was upwardy revised to a gain of 0.7 percent from an advance of 0.6 percent initially reported.

The composite leading indicator comprised of ten components which significantly affect cyclical activity in the economy and together represent major categories of Gross Domestic Product. Eight of ten components registered gains in March compared to six in February.

The financial components remained positive since both stock index and money supply witnessed the sizable gains in March. Likewise, the housing component recovered on advances in both existing home sales and starts. Meanwhile, manufacturing components showed mixed results with a gain of the ratio of shipments to inventories offset by decline in new orders.

USDCAD 1-minute Chart: April20, 2012

Chart created using Strategy Trader – Prepared by Trang Nguyen

The Canadian dollar gains its footing versus most of its major trading partners ahead of an opening bell in North America trade today. The Consumer Price Index and Leading Indicators reports released today failed to trigger a noticeable volatility in the loonie. As seen from the 1-minute USDCAD chart above, the currency pair fluctuated between the range of 0.9910 and 0.9925 after the release. At the time this report was written, the U.S. dollar trades at C$0.9915.

--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

To contact Trang, email tnguyen@dailyfx.com

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