-: : Portuguese of GDP shrinks for sixth quarter of right, but better than expected

The Takeaway: Portuguese GDP for the first quarter arrives in-0,1 %, better that expected-> Shrinking corrects economy due to austerity-> EUR/USD rally the previous session
Gross domestic product of the Portugal fell for the sixth quarter in a row for Q1 2012, but the decline of 0.1% was better than the - 1.0 retractable % expected by analysts. The GDP fell by 2.2% in the first quarter of 2011, which was also better than the expectations of analysts.
The economic slowdown is due to the lower government expenditure and tax increases implemented to reduce the debt of the Portugal. Austerity measures were planned by the 78 billion euros rescue plan provided by the EU and the IMF.

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Portuguese GDP was released along with the GDP of the euro area came in slightly better than expected with 0.0% growth for the first quarter. EUR/USD fell slightly after the two versions, possibly a small gathering of previous day correction.

Loon slips slightly as Canadian Business Conditions loans facilitated in the first quarter

09 April 2012 14:58 GMT  THE TAKEAWAY: [Bank of Canada Senior Loan Officer Survey (Q1) result eases] > [Overall business-lending conditions ease, notably for small businesses] > [CAD slips vs. USD]
Overall business-lending conditions in Canada eased during the first quarter of 2012, following virtually unchanged lending conditions in the last quarter of 2011, according to the Bank of Canada’s Senior Loan Officer Survey (SLOS) results that were released today. The latest survey print eased to minus 16.9 in the first quarter of 2012 from minus 6.3 the previous quarter. The survey, conducted quarterly, collects information on the business-lending practices of Canadian financial institutions, and in particular, gathers the perspectives of respondents on price and non-price terms of business lending. Readings above zero indicate tightening credit terms while figures below zero signal easing conditions.
The survey revealed that price and non-price lending conditions eased across all borrower categories, most notably for small businesses, which saw six consecutive quarters of easing lending conditions. Competition among lenders was cited as the underlying factor in the easing of lending conditions, while an improving economic outlook boosted easing for small businesses. Additionally, the general consensus of respondents suggested that there was little evidence of increased demand for business credit during the first quarter of 2012.

USDCAD 1-minute Chart: April 09, 2012

The Canadian business outlook future sales print for the first quarter of 2012 was released at the same as the SLOS results. Despite improved optimism among Canadian businesses, the loonie weakened slightly against the greenback following release of the survey results. The Canadian dollar initially gained against the U.S. dollar in the first few minutes, but quickly erased gains to fall 6 pips in the following 20 minutes from pre-data release levels. At the time of this report, the USDCAD pair was trading at around 99.830 cents.

* US Dollar Sets Stage for Major Gains in April and Second Quarter |

Quantitative Strategist 07 April 2012 00:45 GMT

Fundamental Forecast for the US Dollar: Bullish

The US Dollar (ticker: USDOLLAR) started the month of April and the second quarter with sharp gains against the Euro and other key counterparts, setting the stage for a major reversal through the coming weeks and months of trade. The Dow Jones FXCM Dollar Index would have finished near 8-month highs, but a considerably worse-than-expected US Nonfarm Payrolls sunk the high-flying Greenback. An important jump in forex market volatility expectations suggests the coming week could be similarly eventful.

Fundamental event risks drops significantly in the days ahead, but volatility may remain elevated all the same. Any especially large surprises in Friday’s US Consumer Price Index inflation figures could drive important US Dollar moves. Yet this past week showed that traders were more than willing to force big EURUSD moves even in the absence of event risk. Just this week we saw a surprisingly hawkish US Federal Reserve send the US Dollar sharply higher, but a disappointing Nonfarm Payrolls result brought the currency back to Earth. Ultimately, do either events represent a true “game-changing” piece of news? Not in this author’s opinion.

The Federal Open Market Committee (FOMC) Minutes from March’s rate decision showed no strong mention of further monetary policy easing, and traders immediately sent US yields and the domestic currency higher. Yet FOMC rhetoric is one matter and what voting members will ultimately decide is another. In other words: the FOMC minutes represent the opinion of a broad range of Regional Fed presidents and other officials. The voting committee is a much smaller group, and on the whole the voting members seem more dovish than the majority.

What of US Nonfarm Payrolls results? Domestic jobs growth literally halved in the month of March and the US Dollar tumbled on the data release. Yet the report wasn’t all bad: the unemployment rate dropped and Average Hourly Earnings grew by more than expected on a year-over-year basis. The result was definitely a disappointment in light of several strong months of data, but we would need to see a more consistent turn lower to claim that March data points to a significant deterioration in labor market conditions.

Markets clearly remain quite sensitive to economic data surprises, but we’re not convinced that the next big US Dollar move will come on any one data release. Instead we wait patiently for a USDOLLAR test of significant 8-month highs and multi-year trendline resistance at 10,134.

The Dow Jones FXCM Dollar Index looked as though it could break higher, and indeed we called for a major US Dollar turn higher against the Euro on a major shift in forex sentiment. If the Euro strengthens significantly and the USDOLLAR drops below important congestion support at 9,900 we would have been proven wrong in our forecasts. Yet the Greenback strengthened through the first week of the month and quarter. Nothing’s guaranteed, but price action in the beginning of a period often sets the pace for later moves. We like the US Dollar higher and would grow further bullish on a USDOLLAR break above 10,134. - DR