The CAD continued to make new lows yesterday as the market received a slate of firmer tone data. The more or less optimistic news helped equities close in positive territory and also took some further shine off an already lack luster USD. The juiciest report of the day was US CPI for March with the takeaway being that headline CPI dipped into negative territory silencing the cries of inflationary fears, at least for the time being.
We have another dose of Tier 2/3 data out of the US and Canada today with the focus being on Canadian Manufacturing Shipment numbers. The market is looking for a 2% M/M advance, or, in real world terms, any sign of fundamental weakness or strength. The US will receive March housing starts and building permits, data that is likely to be a non-event for the FX markets, although any insight into the state of the US housing market is closely monitored as this sector was one of the primary catalysts to our current economic situation.
We enter the day relatively unchanged after the overnight session. We are still bias towards the CAD today although likely to be more nimble as the market consolidates and decides whether or not a move lower is feasible. Flows will continue to drive direction with all eyes on the direction of equities at the open.
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