More John J Hardy, 4 days ago06 December 2011 Non-Independent Investment Research Not much action on the day so far as risk appetite has waxed and waned – rising a bit as the European trading session managed to shrug off overnight weakness in Asia but then finding resistance as EU peripheral debt spreads widened a bit from their tightest levels by later in the day in anticipation of the ECB meeting this Thursday and on the EU treaty changes clearly on the way at this Friday’s EU summit.
Bank of Canada maintains policy
The Bank of Canada kept rates unchanged at its meeting today. In its statement, it fretted a worse than expected European recession while noting the strength in the economy of late south of the border in the US. It felt that second half growth in Canada would be a bit stronger than projected a couple of months ago, but said that Canada’s output gap would persist well into 2013. As the statement continued to describe current BoC policy as providing “considerable” stimulus, it was a slightly hawkish statement overall. Still, the bank frets the issue of Canada’s competitiveness due to the loonie’s strength against the greenback.
Chart: USDCAD
USDCAD is in a no man’s land at the lower part of the middle of the range established after retracing to just below 0.9900 before retesting the 1.0500 area in November. Note the trend-line in play here to the downside and the 55-day moving average serving as resistance. Parity is an even more important dividing line to the downside (though flat-line area at 1.0080/1.0100 also rather obvious), while the upside needs a fresh recover through 1.0500 and beyond for further confirmation that we are in a USD bull market.
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