FOREX TRADING

The biggest outperformer on the session has been CAD after the BoC rate decision revealed a first hike may be far more imminent than markets have priced in. Although rates were indeed kept on hold at 0.25% as expected, there was a notable absence in the statement of the conditional pledge to keep rates at that level until at least July – suggesting a tightening cycle may begin before that time. USDCAD has plunged below parity to 0.9971 lows, a move that represents approximately a 2% gain for CAD against the USD today.

In the other central bank meeting of the day, the Riksbank kept rates unchanged at 0.25%, but SEK benefitted from new clarity in the accompanying statement that a first hike was anticipated in “summer or early autumn”. There were also upgrades to 2011 GDP forecasts, and more optimistic projections for unemployment going forward which helped propel EURSEK lower from 9.6800 levels down towards 9.6400 immediately after the announcement, and the selling pressure has persisted throughout the day to lows of 9.6065.

Both EURUSD and GBPUSD were buoyed by stronger than expected data in the morning session, but both have pared gains as risk appetite has ebbed in the afternoon. UK CPI leapt 0.6% MoM, 3.4% YoY – well above the consensus estimates looking for 0.3% MoM, 3.1% YoY, and the third straight month that the annualized rate has been a percent above target. Meanwhile the latest ZEW surveys painted an encouraging picture of Eurozone recovery; the German current situation component rose to -39.2 from -51.9 last (-48.0 expected), and Eurozone economic sentiment also climbed to 46.0 from 37.9.

Tomorrow’s economic schedule will all be about UK data; with the release of the latest BoE Minutes, March claimant count, and ILO unemployment rate.

AC Markets
http://www.ac-markets.com

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