0830 CAD Retail Sales - Core m/m (+0.3% expected, 0.0% prior, -0.2% to +0.8% range)
* Majority of estimate in +0.1 to +0.6 range
Affliated Reports:
CAD Retail Sales m/m (+0.3% expected, -0.6% prior, -0.3% to +0.7% range)
* Majority of estimates in 0.0 to +0.7 range
Last month the -0.2% deviation on Core m/m came with a -0.3% dev on headline m/m, both also had
the prior month revised +0.1. The USDCAD pair had been rallying since the momentum during the
New York session propelled at the close and pushed the pair back above parity (1.0000) and even
continued 350 pips above it by the time the news was released. Perhaps there was some leak but
these deviations would not be enough to move the pair this much and there was alot of risk-off
sentiment in the market in mid-late september. So despite lower figures the USDCAD was already
a bit overextended and the news served as a capitulation point and the pair actually sold off
some after the news. Perhaps the rumor was of a much worse number and when it was only moderately
worse the USDCAD pulled back after a 15 pip move higher and was down 100 pips within 2 hours of
the release. Remember down on USDCAD means Canadian Dollar strength so not really what you expect
to see on weaker canadian retail sales numbers, but you have to take it in context to the move that
had occurred leading into the release. In August a -0.2 on Core and a +0.1 on headline gave a
conflict. Price dropped about 15 pips but then turned around, we would not be interested in these
deviations anyhow. We are really looking for a nice big deviation on this one to trigger a trade.
A +0.4 on headline and +0.2 on Core for July just caused a quick blip down of 15 pips. In June a
full -0.6 on Core and -0.1 on Headline really did not do much. This is a bit disappointing although
we have been using triggers on +/-0.7 on Core to look for spike trades. In May a -0.8 on Core & -0.9
on Headline produced a good 45 pip move over 6 minutes. Price just continued after the initial spike
in the 1st minute without any pullback, adding another 20 pips to the move. The lack of reaction in
June is a concern, therefore a deviation of +/-0.8 is advised. It is best to see at least a +/-0.5
deviation on the Headline to compliment this, but I would definately use the Core to trigger a trade.
USDCAD is again testing parity after reaching 10660 in the midst of the panic in late Sept/early Oct.
This is a natural support level, but the market makers no this and the current market strength is only
partially a expression of better confidence, it is also a market propelled by squeezing out risk-off
positions initiated during the panic in September.
If Core is +1.1% or higher, and Headline +0.8 or higher, USD/CAD should drop 30-50 pips.
If Core is -0.5% or lower, and Headline -0.2 or lower, USD/CAD should rally 30-50 pips.
****************************************
0900 Bank of Canada Interest Rate Decision (no change @ 1.00% expected)
Again this month no expectations of a change in interest rates for the BOC. With the Eurozone
Debt Crisis situation seeming at least on the surface to be better it still overshadows market
sentiment and the global economic recovery and things could easily just unwind and get worse
at any moment, so now is not the time to hike. The Canadian economy is tightly link to the
US economy and although the horrible economic data from the US seen in late August and September
has rebounded a bit and become not 'so bad', things still are not clearly out the danger zone.
Probabilities of a double dip recession have receded in the past few weeks. At the same time
unemployment in Canada has dropped and household debit is at record levels so it is also not
time to cut rates either. Basically Carney and the BOC remain in a 'wait-and-see' mode as risks
are essentially balanced. GDP forecasts for the next 3 quarters will also likely be reduced by
about 0.75% and the forecast for a return to full capacity extended out to 2013, whereas in July
the BOC forecasted mid-2012 and forecasted 2nd quarter GDP at 1.5% when it actually shrank -0.4%
They also forecast annualized growth of 2.8% in the 3rd quarter, and 2.9% in the 4th quarter.
Analysts estimate 2.0% in the 3rd quarter and 2.1% in the 4th. Changes to these forecasts could
affect the pair. Overnight swap rates show investors don't expect any change until the 3rd quarter
of 2012. However the CPI inflation figures last week were higher, so this will put some pressure
on the Central Bank, so watch out for any emphasis in the statement after the data releas
-If they HIKE rates to 1.25% or higher, USD/CAD should GO DOWN 100+ pips.
-If they CUT rates to 0.75% or lower, USD/CAD should GO UP 100+ pips.
-Watch out for any change in retoric from BOC sounding dovish or hawkish
Visit Profit Mongers website and check out our live trading room!
* Majority of estimate in +0.1 to +0.6 range
Affliated Reports:
CAD Retail Sales m/m (+0.3% expected, -0.6% prior, -0.3% to +0.7% range)
* Majority of estimates in 0.0 to +0.7 range
Last month the -0.2% deviation on Core m/m came with a -0.3% dev on headline m/m, both also had
the prior month revised +0.1. The USDCAD pair had been rallying since the momentum during the
New York session propelled at the close and pushed the pair back above parity (1.0000) and even
continued 350 pips above it by the time the news was released. Perhaps there was some leak but
these deviations would not be enough to move the pair this much and there was alot of risk-off
sentiment in the market in mid-late september. So despite lower figures the USDCAD was already
a bit overextended and the news served as a capitulation point and the pair actually sold off
some after the news. Perhaps the rumor was of a much worse number and when it was only moderately
worse the USDCAD pulled back after a 15 pip move higher and was down 100 pips within 2 hours of
the release. Remember down on USDCAD means Canadian Dollar strength so not really what you expect
to see on weaker canadian retail sales numbers, but you have to take it in context to the move that
had occurred leading into the release. In August a -0.2 on Core and a +0.1 on headline gave a
conflict. Price dropped about 15 pips but then turned around, we would not be interested in these
deviations anyhow. We are really looking for a nice big deviation on this one to trigger a trade.
A +0.4 on headline and +0.2 on Core for July just caused a quick blip down of 15 pips. In June a
full -0.6 on Core and -0.1 on Headline really did not do much. This is a bit disappointing although
we have been using triggers on +/-0.7 on Core to look for spike trades. In May a -0.8 on Core & -0.9
on Headline produced a good 45 pip move over 6 minutes. Price just continued after the initial spike
in the 1st minute without any pullback, adding another 20 pips to the move. The lack of reaction in
June is a concern, therefore a deviation of +/-0.8 is advised. It is best to see at least a +/-0.5
deviation on the Headline to compliment this, but I would definately use the Core to trigger a trade.
USDCAD is again testing parity after reaching 10660 in the midst of the panic in late Sept/early Oct.
This is a natural support level, but the market makers no this and the current market strength is only
partially a expression of better confidence, it is also a market propelled by squeezing out risk-off
positions initiated during the panic in September.
If Core is +1.1% or higher, and Headline +0.8 or higher, USD/CAD should drop 30-50 pips.
If Core is -0.5% or lower, and Headline -0.2 or lower, USD/CAD should rally 30-50 pips.
****************************************
0900 Bank of Canada Interest Rate Decision (no change @ 1.00% expected)
Again this month no expectations of a change in interest rates for the BOC. With the Eurozone
Debt Crisis situation seeming at least on the surface to be better it still overshadows market
sentiment and the global economic recovery and things could easily just unwind and get worse
at any moment, so now is not the time to hike. The Canadian economy is tightly link to the
US economy and although the horrible economic data from the US seen in late August and September
has rebounded a bit and become not 'so bad', things still are not clearly out the danger zone.
Probabilities of a double dip recession have receded in the past few weeks. At the same time
unemployment in Canada has dropped and household debit is at record levels so it is also not
time to cut rates either. Basically Carney and the BOC remain in a 'wait-and-see' mode as risks
are essentially balanced. GDP forecasts for the next 3 quarters will also likely be reduced by
about 0.75% and the forecast for a return to full capacity extended out to 2013, whereas in July
the BOC forecasted mid-2012 and forecasted 2nd quarter GDP at 1.5% when it actually shrank -0.4%
They also forecast annualized growth of 2.8% in the 3rd quarter, and 2.9% in the 4th quarter.
Analysts estimate 2.0% in the 3rd quarter and 2.1% in the 4th. Changes to these forecasts could
affect the pair. Overnight swap rates show investors don't expect any change until the 3rd quarter
of 2012. However the CPI inflation figures last week were higher, so this will put some pressure
on the Central Bank, so watch out for any emphasis in the statement after the data releas
-If they HIKE rates to 1.25% or higher, USD/CAD should GO DOWN 100+ pips.
-If they CUT rates to 0.75% or lower, USD/CAD should GO UP 100+ pips.
-Watch out for any change in retoric from BOC sounding dovish or hawkish
Visit Profit Mongers website and check out our live trading room!
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