Week in FX Americas – Go On: Lean On The Loonie

Finally, someone is looking to ‘lean on the loonie’. This currency is only now trying to play catch up with its antipodean foes -the Aussie and the Kiwi. Both of those currencies of late have found fault with their largest trading partner, China, and with their own strong correlation relationship with commodity prices. The currency pairs have lost -10% in the past month alone. Mind you, the respective central banks rhetoric has also been allowed to lend a directional helping hand.

In Canada, Friday’s domestic story was the weaker than expected inflation (+0.2%) and retail sales reports (-0.3%). With the lack of other fundamental data published Stateside, softer numbers have managed to lead the CAD astray, just shy of 1.05. Not helping the loonies’ plight is the recent “spat of market volatility and sentiment” that has been driven by the Fed’s transparent thoughts and copy this week.

Soft inflation (+1.1% vs. an expected +1.2%) is not just a Canadian issue; it’s a global one. This number should not be a huge shock for the new BoC Governor Polaz, who politely declined to comment on the Bank’s 14-month tightening bias at his first press conference this week. However, the inflation surprises continue to run to the lower side of expectations this year. Analysts have already noted that there is no new timetable for the BoC rate hikes due to the Fed’s recent moves. Today’s data again confirms that the BoC should remain on hold until H2 of next year at least.

• ETF Volatility Surges Signalling a Volatile Summer
• Fed’s Bullard Criticizes Timing of Bernanke Tapering Announcement
• Gold Bounces After Touching 2.5 Year Low
• Oil Prices Drop on China Manufacturing Slowdown and Fed Comments
• Gold Drops as Market Digests Bernanke Tapering Remarks
• World Stocks Hurt by US Fed Tapering Comments
• Bernanke Hints Fed Could End Asset Purchases in 2014
• US Weekly Claims Climb More Than Forecast
• Fed Maintains QE Bond Buying at 85 Billion a Month
• US Fed Sees Economy Recovery as Risks Fall
• Roubini Warns About Emerging Market Slowdown and Fed Exit Strategy
• US Housing Starts Below Expectations But Positive
• Obama Hints at End of Bernanke as Head of Fed
• Soybeans Hits 12 month low on improving weather. Grains prices retreat.
• IMF Criticizes US Budget Cuts as Ill Designed
• US Federal Reserve not Expected to Intervene Until December
• Oil hitting 4 months High on President Obama’s Syrian talks

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