Intraday Market Thoughts

More USD Losses, US Home Sales, BoC Report Next

by Patrik Urban
Jul 20, 2011 12:46

USD is lower across the board as risk appetite improved on hopes that the US debt ceiling and the Greek debt problems will be solved. German PPI comes as expected. Market turns to US Existing Home sales and Bank of Canadas Monetary Policy report.

Euro inches higher against many currencies despite German chancellor Angela Merkel warning against being overly optimistic ahead of Thursdays summit. If the US agrees on its debt ceiling issue and if the Eurozone summit fails to deliver a solution for Greece then the Euro would face a significant risk of a selloff.

Euro is 8 pips away from the highest of our long targets from Tuesday's Premium trades. Our S&P500 longs are also on their way of being hit. Here the direct link to yesterday's Premium Intermarket Insights

Some European banks are already protesting against the idea of a bank tax revealed in the policy paper that outlines various solutions to the Greek debt problem. Banks claim that if the tax is levied it would punish institutions that are not exposed to Greece and threaten to file lawsuits should the tax be imposed on them.

On the data front, German PPI June came out in line with expectations at 0.1%, slightly higher than previous unchanged print.

New York session will start at 8:30 am ET with May Canadian Wholesale Sales. Analysts are expecting an improvement to 0.2% from previous -0.1%. CAD traders should also pay attention at 10:30 am when Bank of Canada releases its Monetary Policy Report and then also at 11:15 am ET when BoC holds press conference.

US June Existing home sales are due at 10:00 am ET. They are expected to increase to 4.92M from 4.81M. Even though the sales have somewhat improved over the past year, they continue to be well below levels seen before the financial crisis. The present foreclosure rate is still high so it will likely take more time before the housing market starts to improve.

Somewhat unusually, at 10:00 am ET Eurostat releases its Eurozone Consumer Confidence for July. The confidence is expected stay at -10 which is a zone where confidence has stayed over the past 10 months.


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