Archived IMT (2011.04.19)

Improved German PMI helps euro recover some lost ground. Canadian inflation data expected to show higher prices, but CAD gains may not be sustained. US building permits and housing starts set to rebound from multi-year lows in February. Goldman Sachs, J&J first on deck for Q1 results ahead of US market open.

Euro traded firm in the opening hours of the London session after a better than expected Manufacturing PMI data from Germany. Advanced April figure of 61.7 was well above consensus 60.0 and represents the 2nd best monthly print in at least 3 years. Strong results helped EUR/USD rise above $1.4260 from session-low $1.42 handle, paving the way for a test of $1.43. European bourses also opened higher despite the selloff in Asia, while US equity futures pared some of the earlier weakness.

Turning to the release of CANADA MARCH CPI (7:00 EST, 11:00 GMT), consensus estimates indicate moderate acceleration in price pressures. On a headline basis, 0.7% expectations would mark the highest level since May of 2009, while core CPI is seen rising to a more modest 0.3% m/m - a 5-month high. We should point out that any CAD strength from hotter than expected inflation numbers amid the recent resurgence of risk aversion should be temporary, especially considering the most recent BoC statement allowing for a temporary spike in inflation through the second quarter. 0.9580 in USD/CAD presents formidable support that has withstood two prior attempts with the next key level of resistance at the late-March base / 50% retracement of the pair's month-long decline at 0.9750.

US housing data at 12:30 GMTis expected to offer only a modest reprieve from woeful February data that saw building permits and housing starts both at multi-year lows of 517K and 479K respectively. Estimates call for a slight improvement in both, potentially paving the way for a rebound in Existing home sales on tap for Wednesday. Note that while the more hawkish Fed officials have indicated they will not await a more meaningful turnaround in US housing, the apparent double dip has lasted well beyond the policymakers' most bearish scenarios.

Breaking down the busy US earnings session, Goldman Sachs and J&J will report results in the morning session while tech heavyweights IBM, Intel, and Yahoo will report after close. The EX-FACTOR FOR GOLDMAN COULD BE for Goldman could be outside the actual numbers but with the POSSIBILITY OF A LEADERSSHIP CHANGE - a NY Times article over the weekend speculated CEO Blankfein may be close to stepping down. J&J disappointed last time on the top line and also guided full-year below consensus at $4.80-4.90 - look for an update on recently confirmed JNJ interest in a Swiss-listed Synthes that would value the company at $20 billion. In afterhours tech, Intel is particularly notable following its hiccup in releasing the new SandyBridge chip. As we saw with disappointing Texas Instruments results overnight, Japan earthquake may also weigh on Q1 earnings.

by GG - AshrafLaidi.com Staff