Week in FX Americas – Loonie Is As Boring As It’s Data

Despite the mass fallout in commodity prices this week, the loonie has traded in a well-contained range. It has been trading like a currency that time forgot, unlike its partner in crime the AUD down-under. Even the IMF warning that the Aussie is about +10% overvalued has tried to take the edge off the Japanese housewife’s favorite commodity currency. Modest support from cross/JPY buying and a credit rating agency’s triple A-rating nod has the AUD outperforming its sister for now.

Notwithstanding the Bank of Canada holding O/N rates steady at +1% this week, outgoing Governor Carney sung more of a dovish tune – up until now he was one of the last remaining global ‘hawks’. The BoC has reduced its growth forecast for 2013 and said economic slack will persist for more than two years. Policy makers have lowered their 2013 growth forecast to +1.5% from the +2% it had predicted in January, after recent data in Canada, China and the U.S. trailed forecasts.

Friday’s Canadian data certainly supports the Bank’s change of heart. Canada’s annual inflation rose last month at a slower pace than in February (+1%, y/y vs. +1.2%), mostly on the back of a drop in gas prices. Ex-CPI climbed as expected to +1.4%, y/y. There you have it, tepid inflation is expected to be the norm in Canada for nearly two more years. Even Canadian wholesale trade remained unchanged last month, falling short of market expectations to +CAD48.8-billion. Even on a volume basis, sales were unchanged. All of this highlights the “new normal” of disappointing domestic data making it difficult to get excited about the currency in the short term.

• USD/CAD Near 1.0250 Before G–20 Meeting
• Fed Lacker Would End QE if he Could
• US Weekly Jobless Claims Little Changed
• G–20 Draft Affirms Pledge to Avoid Competitive Devaluations
• USD/CAD Moves to 1.0250 after Carney Reduces Economic Growth Forecast
• Demand for the Multifamily Unit Assists Surge in U.S. Housing Starts
• No clear villian causing Gold 2 day crash
• John Paulson Gold Bet losing 1.52 Billion on Paper
• US Send First Salvo Over BOJ’s Shenanigans
• US Manufacturing Drops to 5 Month Low
• U.S. and China Data Raises Recovery Worry as Risk Assets Hit
• Negative Tone for Oil Prices from US and China Data

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