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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FAST FOREX NEWS - Strong Niemcy PKB obsługuje niestabilnych EUR

* Euro recovers from low of $1.2814, German data helps
* But common currency vulnerable to risk of contagion
* Aussie recovers from 5-month low vs dollar
By Anirban Nag
LONDON, May 15 (Reuters) - The euro held above a four-month low on Tuesday after German economic growth beat expectations, although gains could prove fleeting as the political stalemate in Greece stokes fears that Athens may renege on bailout pledges and exit the currency bloc.
European powerhouse Germany saw its economy expand in the first quarter at a robust clip of 0.5 percent, shaking off any fears of a recession. But a survey of German analyst and investor sentiment fell sharply in May, while GDP in France flatlined and Italy contracted sharply.
Overall, much of the euro zone was still struggling with a slowdown, putting pressure on the European Central Bank to loosen monetary policy to support the economy.
That is likely to see bears take a stronger grip of the euro. Also, concerns about slowing Chinese and global growth are likely to keep investors away from higher-yielding currencies as they prefer the safe-haven dollar and yen. Earlier, the Australian dollar flirted with a five-month low against the U.S. currency before paring losses.
"The better-than-expected German numbers have offered the euro some support but it remains vulnerable to headlines," said Jane Foley, senior currency strategist at Rabobank.
"It serves as a reminder to investors why the euro has been resilient to downside risks. But the prospects for the ECB to step in over the coming months to address not only the recession but contagion fears are rising."
The euro was 0.2 percent higher at $1.2845, off a four-month low of $1.2814 struck earlier in the day. It found some support at $1.2827, the 76.4 percent retracement of its rally earlier this year from $1.2624 to $1.3486.
A clear break of that retracement level could open the way for a test of the January low of $1.2624, though some analysts said the euro could enjoy some rebound in the short term, having fallen more than three percent so far this month.
Any bounce in the euro could run out of steam above $1.2880-$1.2900 with peripheral bond yields still at elevated levels. That highlighted the risk of contagion from the Greek deadlock spreading to other euro zone countries.
Data on Tuesday showed the Greek economy deep in recession, and there was little hope of it forming a government soon. Greek President Karolos Papoulias's proposal to put together a technocrat administration was unlikely to be accepted, making a new election the most likely outcome.
Many market players think a fresh election will make it more likely for Athens to ditch its bailout pledges and hence the euro, even though euro zone finance ministers dismissed talk of Greece's exit as "propaganda and nonsense".
GLOOMY EUROZONE
The German ZEW think-tank said uncertainty after the recent elections in Greece and France had probably contributed to a sharp slide in sentiment. The index fell to 10.8 in May from 23.4 in April, well below a consensus forecast for a drop to 19. .
"These economic numbers change nothing for the euro zone," said Stuart Frost, head of Absolute Returns and Currency at fund manager RWC Capital. "Germany is the standout, based on the GDP numbers, but the rest are struggling and we expect the euro to drift lower towards those lows of $1.2630."
The dollar index was hovering near a four-month high of 80.739, having made solid progress in the past few sessions on safe-haven flows.
While the dollar has benefited from the euro zone's woes, its gains have been curbed by speculation the U.S. Federal Reserve may take additional steps should the economy falter.
Even though not many market participants expect the Fed to announce fresh easing steps next month, U.S. retail sales and consumer inflation numbers due later in the day are in focus because they could change that expectation.
Against the yen, the dollar moved little at 79.88 yen , above a 2-1/2-month low of 79.428 yen hit last week, with major support seen at 79.14, a 61.8 percent retracement of its rally from February to March.
The Australian dollar touched a five-month low of $0.9945 , after the minutes of the latest Reserve Bank of Australia meeting showed concerns about a cooling in growth and inflation were behind its unexpected 50 basis point rate cut in May. It pared losses to trade at $0.9986, up 0.3 percent on the day.

€ Euro under pressure despite of strong German industrial data

THE TAKEAWAY: Strong German industrial data-> Euro and risky currencies Markets digest French, Greek election results
German industrial production was stronger than expected in March, removing some of the bite from a weak open weekly for the single currency. Production rose 2.8% on the month, more than the - 0.3% markets had expected. The yearly number was 1.6% versus the expected - 1.2%, the German stats Office said today. Both the monthly and yearly figures saw upward revisions.
Germany has struggled to maintain industrial growth as declining global demand continues to erode. Even so, Europe's largest economy remains its strongest, although yesterday's election results from France and Greece threaten to test Berlin's mettle in demanding tough reforms across the Eurozone. Both nations elected anti-austerity parties in a repudiation of the German-led drive to reduce sovereign debt in the Euro-area.
Germany's leader Merkel reportedly told French President-Elect Holland that the Eurozone fiscal compact approved last fall is not up for renegotiation. Berlin has taken a similar hard position regarding Greece, where last weekend's election results are likely to bring increased opposition to austerity.

The Euro remained pressured today as risk-correlated currencies took a beating in the wake of uncertainty over the Eurozone's future.

$$ US Dollar Remains Strong despite April ISM Non-Manufacturing Decelerates

THE TAKEAWAY:U.S. non-manufacturing activity grew less than expected in April but > Business activity, new orders, employment growth and prices all decelerated > USD remains strong versus major peers
U.S. economic activity in the non-manufacturing sector continued to expand at a slower pace in April as sale has slightly improved, business conditions has leveled off, and fuel and food continued to be a challenge.
The report released by Non-manufacturing Institute of Supply Management (ISM) report showed that its April non-manufacturing index disappointingly declined to 53.5 percent from 56.0 percent registered in March. The print is well below consensus forecast of 55.3 percent, according to seventy-four economists polled by Bloomberg News survey.
The Business Activity index, which is considered the most important in 10 sub-indexes reported, slipped to 54.6 percent, 4.3 percentage points lower than the 58.9 percent reported in March. This corresponds with survey responses that “business is slowing and projections for the rest of the year are being lowered”. Similarly, the New Orders index fell 5.3 percent to 53.5 percent as a result of contraction in four industries including mining, utilities, health care and public administration.
Employment index, which rose 1 percent to 56.7 percent in March, unexpectedly decline decreased by 2.5 percent to 54.2 percent, pointing to slower pace of job creation. Additionally, the Prices index tumbled 10.3 percent to 53.6 percent, suggesting price increase at a significantly slower rate in April compared to March. Nonetheless, respondents remain concerned about rising fuel costs and the impact on shipping, transportation and petroleum-based product costs.
EURUSD 1-minute Chart: May 3, 2012

Chart created using Strategy Trader – Prepared by Tzu-Wen Chen
The greenback remained strong versus most of its major currency counterparts after the lower-than-expected ISM non-manufacturing report. As seen on the 1-minute EURUSD chart above, the currency pair dropped approximately 30 pips from 1.3180 to 1.3150. At the time this report was written, the euro saw some correction, trades at $1.3160.

||| Sterling Strong: highlights of data housing good Continental weakness

02 May 2012 08: 21 GMT  THE TAKEAWAY: Better than expected UK housing data props Sterling against the Euro, with less than ideal numbers from the continent slowing down the single currencyMortgage approvals in the United Kingdom rose during March, sparking a bout of strength in the Pound against the Euro and US Dollar. 49,900 mortgages were approved versus the 48,000 approvals forecasted by a team of economists.
Sterling strengthened against the beleaguered Euro as positive the UK data contrasted with less than ideal numbers from the continent. EUR/GBP fell to fresh yearly intraday lows.
Although the data encouraged some market participants, especially since in coincided with a better than expected PMI manufacturing out of the UK, the outlook for policymakers remains bleak.A GDP contraction in 2012's first quarter has pushed the UK into its first double-dip recession since the 1970s, and pressure on UK officials is expected to increase. UK PM David Cameron has faced criticism for promoting austerity instead of stimulus andthe Bank of England recently said growth could contract because of weak construction during the Jubilee holiday season.

Pound Surges on Strong Retail Sales Data Set

 20 April 2012 09:00 GMT  THE TAKEAWAY: UK retail sales improve on expectations -> Economic outlook improving but still delicate -> Strong data set bolsters Sterling

UK retail sales rose at the fastest pace in over a year as warm March weather boosted clothing and gardening equipment sales, the UK stats bureau reported today. March sales rose 1.5% on the month versus the expected 0.4% increase, and when compared to March 2011, sales increased 2.8% against the expected 1.3%. Panic caused by rising fuel prices also contributed to the strong showing.

The data added to optimism that the UK economy returned to growth in 2012’s first quarter. UK unemployment dropped for the first time in almost a year to 8.3% on the month, the stats bureau said earlier this week. However, with wages continuing to fall in real terms and firms remaining reluctant to hire, the foundations for a sustainable long-term recovery in retail spending remain shaky.

Meanwhile, the Bank of England continues to juggle growth stimulus against the rising threat of inflation. This week’s hawkish BOE minutes highlighted the inflation issue, and BOE member Tucker recently said CPI may not fall as fast as hoped, and described recent news on inflation as “bad.”The Minutes also said that although global economic recovery is proceeding broadly as expected, concerns out of the Eurozone are now greater if anything.

 Today’s retail sales data bolstered the pound against the US Dollar. Cable strengthened to a session high by 1.6116, and Sterling also gained against the Euro and Japanese Yen intraday.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and charts from FXCM.

20 April 2012 09:00 GMT

*** 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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Stocks Take a Breather Despite Strong Rally From Apple

US markets consolidated but continue to assist trend following Openbook traders who have a long US equity bias.  Guru trader Maximus24876 continued to fight the tape selling the Dow Industrials on Thursday ahead of the ECB and BoE meetings.  Returns for this portfolio manager have been rocky during the past few months, as picking a top in riskier assets has proven to be a difficult task.  Maximus24876 trades approximately 14% of his portfolio in US equity, and has had a hard time generating returns as US equities have been a one way train during 2012.Maximus24876 is not the only bear trading on Openbook. Guru traders are expressing their opinions through a new section called Guru Talk which can be found off a tab on the main page of the eToro blog. Trader Atelieruk reviewed a paper in which super stock strategist Tom Hougaard discusses the potential for the Dow to fall below 5000.
Petra09, among the most active of the US equity index traders on Openbook, continues to ride the wave higher, notching up gains during the week as equity bourses grind higher.  In addition to solid gains on US indexes, Petra09 made over 22% during the week on a long position in the DAX.
Europe regained the spotlight toward the end of the week, creating headwinds for the US equity markets.  After announcing an austerity agreement on Thursday, US traders woke to news that EU Finance Ministers in Brussels told the Greek Finance Minister that an additional 325 million Euros in cuts would be need to receive a second aid package.  The skepticism over the agreement was warranted Thursday, as the US indexes failed to rally on the news.
Apple stock price continue to drive the Nasdaq during the week as the stock pushed to new all time highs reaching for $500 dollar per share.  Technically, the Nasdaq continues to surge higher, and an increase in volume is confirming the uptrend.  The RSI on the Nasdaq is moving into a concerning overbought level above 80, which is the first time the RSI has moved above the 70 level during the past 6 months.  Support on the technology index is seen near the 10-day moving average at 2507.  Resistance is seen near weekly highs near 2800.

Strong jobs data propels the United States rally

5 February, 19: 38
  US equities continued to assist the Openbook traders with long US equity index positions.  Trader last week highlight, Petra09 continued to ride the momentum, cutting up to a 25% increase on one of its positions in the Dow Industrial index.  Its balance sheet, 3 months of solid performance in the the Index namespace includes a return of 88.8% in the three months, which deserves the attention of traders who seek to copy of index U.S. merchants.
Markets are always several points of view and many continue to try to choose a top near the levels of resistance on risky assets.  Trader guru Maximus24876, plans to put a S & P 500 Index short position Thursday ahead of non-farm of the Friday payroll report.  When asked about his prospects by one of his disciples, trader, Chriss100, Maximus24876 replied that he believes that a reversal is. He added that today ' today (Thursday) is the beginning of a new risk aversion move.
Maximus24876 had a rocky month in January, but showed solid results in 6-12 months with 692.1% and 41.3% respectively.  This merchant has 2398 supporters and 233 copiers and we index uses to express his point of view by 15% of the time.
Markets U.S. flakes less in the first part of the week, but received a boost Wednesday when ADP and the use of Macro out private online employment advisors. Optimistic traders given line number hope that many Government Friday would provide a boost the market.
Strong ADP data was followed by rash number Non-farm Payroll which also included a better than expected employment rates.  The number of jobs that were completed in January jumped 243 000, much better than the average estimate of 125,000.  Most analysts also expect the employment rate would check the level of 8.6% and were surprised by the decline of 8.3%.  The US economy obviously gains traction, which could lead to a further increase of U.S. stock indexes.
Technically, the major index broke down.  100 Open Nasdaq open over 2500 and wiped out the fact a year index 11 high strength low.  Support on the Nasdaq is seen near the old highs to 2440.  The 500 S & P also pushed higher and also meet with a golden cross distributed upward (the moving average 50 days across the moving average 200 days) in the middle of the week.  The strong momentum should continue to allow Howser traders Openbook as Petra09 to reap the benefits.