Canadian Dollar Maintain Gains after BoC, Supported by Oil

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Mid-Day Report: Canadian Dollar Maintain Gains after BoC, Supported by Oil Canadian dollar maintains gain in early US session after BoC left rates unchanged, and with help from rise in crude oil prices. BoC kept the overnight target rate at 1.00% as widely expected, with bank rate and deposit rates unchanged at 1.25% and 0.75% respectively. The bank noted that "global economic recovery is proceeding broadly as expected" and so was in Canada. The GDP growth of annualized 3.9% in Q1 "continued strong business investment, smaller contributions from household and government spending, and a modest drag from net exports". Underlying inflation is still "relatively subdued" while headline CPI is expected to climb to above 3% in near term but convergence with core inflation at 2% by middle of 2012. BoC finally noted that "considerable monetary policy stimulus currently in place will be eventually withdrawn" but "such reduction would need to be carefully considered." So basically, BoC continues to lean towards tightening bias but the next time would unlikely happen in near term. Full Report Here...
Featured Technical Report
USD/CAD Mid-Day Outlook Daily Pivots: (S1) 0.9751; (P) 0.9769; (R1) 0.9787; More. USD/CAD's fall from 0.9815 accelerates to as low as 0.9667 in early US session and intraday bias is cautiously on the downside for 0.9640 minor support. Break there will confirm that whole rebound from 0.9444 has completed and deeper decline should then be seen to retest this low next. On the upside, above 0.9727 minor resistance will turn bias neutral and bring recovery. But break of 0.9815 is needed to confirm rise resumption. Otherwise, risk of another fall will remain. Read more... EURUSD Technical Outlook USDJPY Technical Outlook GBPUSD Technical Outlook USDCHF Technical Outlook USDCAD Technical Outlook AUDUSD Technical Outlook EURJPY Technical Outlook EURGBP Technical Outlook EURCHF Technical Outlook GBPJPY Technical Outlook

Special Report

BOC To Deliver Same Dovish Tone As In Early May, No Change In Policy Stance In June While the June BOC meeting will likely be a non-event (i.e.: the policy rate will stay at 1% while corresponding Bank Rate and Deposit Rate will remain at 1.25% and 0.75% respectively), the market focus is on whether Governor Mark Carney will hint on a rate hike in the next month. We expect the post-meeting statement will remain dovish, a similar tone as the speech the Governor delivered earlier this month. Read more...

Economic Indicators Update	The Traders Expo provides a chance to take a productive step back from the trading screen and look at the overall markets from a broader perspective. Join your fellow traders at The Traders Expo Dallas and experience it for yourself.
GMT Ccy Events Actual Consensus Previous Revised 23:30 JPY Household Spending Y/Y Apr -3.00% -2.80% -8.50% 23:30 JPY Unemployment Rate Apr 4.70% 4.70% 4.60% 23:50 JPY Industrial Production M/M Apr P 1.00% 2.20% -15.50% 23:50 JPY Industrial Production Y/Y Apr P -14.00% -12.40% -13.10% 01:00 NZD NBNZ Business Confidence May 38.3 14.2 01:30 AUD Building Approvals M/M Apr -1.30% -1.80% 9.10% 01:30 AUD Current Account (AUD) Q1 -10.4B -10.1B -7.3B 05:00 JPY Housing Starts Y/Y Apr 0.30% -3.90% -2.40% 05:45 CHF GDP Q/Q Q1 0.30% 0.70% 0.90% 06:00 CHF UBS Consumption Indicator Apr 1.59 1.66 06:00 EUR German Retail Sales M/M Apr 0.60% 1.80% -2.70% 07:55 EUR German Unemployment Rate May 7.00% 7.00% 7.10% 07:55 EUR German Unemployment Change May -8K -30K -37K -33K 09:00 EUR Eurozone CPI Estimate Y/Y May 2.70% 2.80% 2.80% 09:00 EUR Eurozone Unemployment Rate Apr 9.90% 9.90% 9.90% 12:30 CAD Industrial Product Price M/M Apr 0.50% 0.70% 0.90% 12:30 CAD Raw Materials Price Index M/M Apr 6.80% 4.20% 5.70% 13:00 CAD BoC Rate Decision 1.00% 1.00% 1.00% 13:00 USD S&P/Case-Shiller Composite-20 Y/Y Mar -3.60% -3.40% -3.30% 13:45 USD Chicago PMI May 62.3 67.6 14:00 USD Consumer Confidence May 66.
Forex Trade Ideas
Trade Idea Update: USD/CHF – Sell at 0.8595 As the greenback has continued to edge higher after rebounding from 0.8476, retaining our view that further consolidation above recent low at 0.8457 would take place and mild upside bias remains for retracement to 0.8591-93 (current level of the Ichimoku cloud top and 38.2% Fibonacci retracement of 0.8814 to 0.8457), however, renewed selling interest should emerge there, bring another decline. Read more... Trade Idea: AUD/USD –Buy at 1.0600 Despite intra-day brief rise to 1.0757, as aussie has just retreated, suggesting consolidation below this level would be seen and pullback to 1.0590/00 cannot be ruled out before prospect of another rally. A break of said resistance would extend gain to indicated upside target at 1.0793 (61.8% Fibonacci retracement of 1.1012-1.0440) but a sustained breach of this level is needed to confirm correction from 1.1012 top has ended at 1.0440 Read more... Candlesticks Intraday Trade Ideas Update Schedule (GMT): 1st Update: 0630 - 0700; 2nd Update: 0930 - 1000; 3rd Update: 1230 - 1300; 4th Update: 1500 - 1530 Pairs Covered: EUR/USD, USD/JPY, GBP/USD, USD/CHF Elliott Wave Daily Trade Ideas Update Schedule (GMT): AUD/USD, EUR/JPY: 0800 - 0830; EUR/GBP, USD/CAD: 1330 - 1400
Suggested Readings
Fundamental Highlights Investors Eye Riskier Bets - Stocks Up, Dollar Down Yen Weakens as Moody's Mulls Debt Downgrade WSJ Reports Germany Softening its Stance on 2nd Greek Bailout, EUR/USD Rallies to 1.44 EURUSD the Catalyst for Risk London Session: Germany Caves In To Demands To Help Greece EUR Rises To A 3-Week High On Hopes For A Greek Deal WSJ Article Heralds A Turning Point In This Phase Of The Greece Crisis Risk Back In Favour? Technical Highlights AUDUSD: Recovery Halts, Weakens Will USD/CAD Extend its Bearish Breakout after the BoC Statement? USD/JPY Targets 83.20, 83.30 Wave Equality EUR/USD Crosses 1.44 on its Way to 1.46, 61.8% Retracement Ones to Watch: AUDUSD USDCHF - Weakness To Target The 0.8400 Level

Talk Giant Panda on the prowl in AUD/USD

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• Talk Giant Panda on the prowl in AUD/USD
• Analysis:Eurozone HICP Unexpectedly Eases to +2.7% Y/Y In May
• ITALY DATA: Preliminary May HICP rose 0.2% m/m, 3.0%.
• EMU DATA: Eurozone consumer price inflation slowed…
• Draghi: ECB Won’t Be Distracted By Debt Crisis,Dependent Banks
• ECB’s Draghi – ECB monetary policy still accomodative, ensuring price stability is its fundamental contribution to growth
• Greek 5 year credit default swaps fall 43 bps on day
• Can euro-zone chiefs repeat trick with Vienna initiative?
• Germany’s Jobless Below 3 Mln;May’s Fall Weaker Than Expected
• GERMANY DATA: The German jobless rate remained at a..
• Italian April adj jobless rate 8.1%
• German unemployment change May -8k
• USD/JPY firms in early European trade
• Danish Q1 GDP -0.5% q/q, +1.1% y/y
• FRANCE DATA: April PPI +0.8% m/m, +6.4% y/y; March…
• FRANCE DATA: April sa consumer spending on mfg gds…
• French April producer prices +0.8% m/m
• Cash-strapped UK families switch £60 bn-worth of mortgages to interest-only
• Germany’s Retail Sales Recovered Less Than Expected In April
• UBS consumption indicator for Switzerland falls to 1.58 in April

Talk Giant Panda on the prowl in AUD/USD Posted: Getting reports China sold AUD/USD above 1.0700 in recent trade. We’re presently at 1.0690. They seem to have been fairly regular sellers into strength of late. Also talk sell stops gathering through 1.0675.

Analysis:Eurozone HICP Unexpectedly Eases to +2.7% Y/Y In May Posted: May flash: +2.7% y/y MNI survey median: +2.8% y/y MNI survey range: +2.6% to +3.0% y/y April: +2.8% y/y — FRANKFURT (MNI) – Eurozone inflation eased somewhat in May to 2.7% from April’s 30-month high of 2.8%, Eurostat estimated Tuesday. Most analysts had expected a steady rate or a slight acceleration The annual rate suggests [...]

ITALY DATA: Preliminary May HICP rose 0.2% m/m, 3.0%. Posted: ITALY DATA: Preliminary May HICP rose 0.2% m/m, 3.0% y/y, unchanged y/y from April’s 30-month high –The preliminary main domestic index (NIC) rose 0.1% m/m and 2.6% y/y, also unchanged y/y from in April. –Core NIC inflation stabilizes at 1.8% y/y; net of energy up 2.1% y/y –The May NIC data provided a platform of [...]

EMU DATA: Eurozone consumer price inflation slowed… Posted: EMU DATA: Eurozone consumer price inflation slowed to +2.7% on the year in May, Eurostat reported on Tuesday, citing preliminary figures. Median forecasts had been for no change to the +2.8% figure. – For more information, please see MNI Mainwire

Draghi: ECB Won’t Be Distracted By Debt Crisis,Dependent Banks Posted: ROME (MNI) – The European Central Bank is completely committed to its primary objective of price stability and will not be distracted by the Eurozone’s sovereign debt crisis or the problem of weak banks still dependent on central bank funding, ECB Governing Council member Mario Draghi said Tuesday. “The ECB has the task of ensuring [...]

ECB’s Draghi – ECB monetary policy still accomodative, ensuring price stability is its fundamental contribution to growth Posted: Neither sovereign risks nor some banks’ abnormal dependence on ECB funds can divert it from primary goal of ensuring price stability Risk of inflation rising, now greater need to proceed globally with monetary policy normalisation No shortcuts available on euro zone debt crisis, response lies in complete implementation of agreed adjustment plans

Greek 5 year credit default swaps fall 43 bps on day Posted: To 1,400 bps. Portuguese 5 year credit default swaps fall 12 bps to 673 bps Greek/German 10 year govt bond yield spread narrows to 1,304 bps from 1,336 when I arrived.

Can euro-zone chiefs repeat trick with Vienna initiative? Posted: Paul Hannon in WSJ

Germany’s Jobless Below 3 Mln;May’s Fall Weaker Than Expected Posted: SA Unemployment: -8k (pan-German), -9k (West), +1k (East) MNI survey median: -30k m/m MNI survey range: -5k to -35k m/m – FRANKFURT (MNI) – The number of unemployed in Germany fell below the symbolic three million mark in May for the first time since November, but the seasonally adjusted monthly decline was weaker than generally [...]

GERMANY DATA: The German jobless rate remained at a.. Posted: GERMANY DATA: The German jobless rate remained unchanged at a seasonally-adjusted 7.0% as expected, as 8,000 persons left the ranks of the unemployed, the Federal Labour Office reported – Germany May sa unemployment -8k (MNI median -30k) – Germany April sa unemployment rate 7.0% (MNI median 7.0%) – Germany May sa job vacancies +2k vs [...]

Italian April adj jobless rate 8.1% Posted: Better than median forecast of 8.3%.

German unemployment change May -8k Posted: Not as good as Reuters median forecast of -30k. May s.a jobless rate down to 7.0% from previous 7.1%, as expected. EUR/USD sits at 1.4410.

USD/JPY firms in early European trade Posted: Presently up at 81.65 from around 81.15 when I arrived. Talk of sizeable USD/JPY fix demand today (said to be in excess of a yard of dollars) Market as usual busy front running said interest. Model funds have been notable buyers of the pairing in this latest leg higher.

Danish Q1 GDP -0.5% q/q, +1.1% y/y Posted: Demonstrably weaker than median forecasts of +0.5%, +2.3% respectively. Q4 GDP revised up, to -0.2% from previous -0.4%.

FRANCE DATA: April PPI +0.8% m/m, +6.4% y/y; March… Posted: FRANCE DATA: April PPI +0.8% m/m, +6.4% y/y; March +0.9% m/m, +6.6% y/y – PPI in line with MNI analysts survey median forecast – April manufacturing PPI +0.5% m/m, +6.4% y/y – April oil product prices +2.4% m/m, +31.2% y/y – April food and tobacco prices +0.8% m/m, +6.7% y/y – April industrial import prices [...]

FRANCE DATA: April sa consumer spending on mfg gds… Posted: FRANCE DATA: April sa consumer spending on mfg gds -1.8% m/m, -0.1% y/y – Below most analysts’ forecasts; MNI survey median fcst: -0.3% m/m – April consumer spending -2.2% vs 1Q average; 1Q +0.3% q/q – March spending revised to -1.0% m/m from -0.7% m/m – For more information, please see MNI Mainwire

French April producer prices +0.8% m/m Posted: As expected. Consumer spending -1.8% m/m, much weaker than median forecast of -0.3%. March data also revised lower to -1.0% from previous -0.7%.

Cash-strapped UK families switch £60 bn-worth of mortgages to interest-only Posted: Sign of the times

Germany’s Retail Sales Recovered Less Than Expected In April Posted: Real, seasonally adjusted retail sales: April: +0.6% m/m, +3.6% y/y MNI survey median: +1.8% m/m MNI survey range: +0.5% to +3.0% m/m March: -2.7% m/m, -3.6% y/y (unrevised) – FRANKFURT (MNI) – German retail sales recovered less than generally expected in April after a steep drop in March, the Federal Statistical Office said Tuesday. Turnover [...]

UBS consumption indicator for Switzerland falls to 1.58 in April Posted: From revised 1.68 (prev 1.66) in March. UBS economic research opines that consumer sentiment may have been adversely affected by negative reporting on the European debt problem and Japanese disaster. Still has a positive outlook for Swiss consumers.