Week in FX: Americas Oct. 9-14

Friday’s strong North American data is providing the backdrop for a more supportive risk environment. But, its the G20 meeting that brings hope and optimism to resolving the Euro-zone crisis. Let’s hope investors will be full of the same optimism come Monday morning.

In reality, until there is a clear resolution to the European situation, the risks to global growth remain to the downside. France and Germany believe that they are moving closer on a comprehensive package to stabilize the Eurozone. The package includes maximizing the force of the EZ bailout fund and finding a solution for Greece.

Some of the currency swings have investors believing that a ‘stability road map will be implemented soon’. Both France and Germany hold the key to resolving the all important question of how to boost the EFSF fund without demanding further contributions from other nations. It will be an interesting weekend of debates.

• Shortened work week in North America as US celebrated Columbus Day and Canada Thanksgiving.
• CAD: Housing Starts rose +7.3% to an annual pace of +205.9k in September. This was mainly due to an increase in multiple stats.
• CAD: Housing Starts rose an impressive +7.3%, seasonally adjusted, to an annual pace of +205.9k, mainly due to an increase in multiple starts.
• CAD: New-home price index rose for a fifth consecutive month in August, led by a gain in Toronto. The index advanced +0.1% matching the July increase.
• USD: Weekly claims edged down last week (-1k to +404k), signaling a slow improvement in the stubbornly weak US labor market. Claims are still too high given that the economic recovery is more than two-years old.
• USD: Trade deficit hardly registered on anybody’s radar, coming in relatively flat for August at +$45.61b over July’s +$45.63b print. However, the release masked a +7.4% jump in the trade gap with China, to record -$28.96b, as imports soared from China to -$37.36b, a +6.4% jump.
• CAD: Merchandise trade deficit was narrower than analysts forecasted in August as exports and imports both rose. The deficit of -C$0.62m was smaller than the-C$1b median guesstimate.
• USD: Retail Sales blew away all analysts expectations (+1.1% vs. +0.7%), even ex-autos impressed (+0.6% vs. +0.3%), allowing risk appreciation to dominate again.
• CAD: Recorded a strong manufacturing shipment print for August (+1.4% vs. +0.3%) and the previous month revised up (+0.3% to +3%)
• USD:Thomson Reuters/University of Michigan preliminary October index of consumer sentiment fell to 57.5 from 59.4 a month earlier.

ASIA WEEK IN FX

 

WEEK AHEAD

• AUD and GBP present their Monetary Policy Minutes
• Inflation data come from the USD, CAD and GBP
• Business Outlook Surveys and Economic Sentiment reports come from CAD and EUR (Germany)
• Investors gets a peek at CNY’s GDP on Monday
• US TIC data comes our way Tuesday followed by Building and Existing Home Sales
• GBP records how retail sales is doing on Thursday

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