CAD Jumps After BOC, Chinese Real Estate in Focus

The Bank of Canada hinted at future rate cuts, sending CAD broadly higher. Risk trades strengthened on optimism about Europe and the yen lagged. Chinese real estate data will be the highlight of the upcoming session. Latest Premium Intermarket Insights on EURUSD, EURJPY, with USDCAD shorts and US crude longs hitting all targets.

The Bank of Canada said removing monetary stimulus “may become appropriate” after holding rates at 1.00%, as expected. The BOC also raised its outlook for Canadian growth this year to 2.4% from 2.0% while taking its 2013 GDP forecast down by roughly the same level.

The market has raised expectations of a hike in 2012 to 70% and some economists say it could come as soon as June. USD/CAD slumped to 0.9864 after the decision but remains in its well-established range from 0.9850 to 1.0050.

Overall news was mixed as US housing starts and industrial production disappointed but the market was focused on a decent Spanish bond auction and the positive ZEW data. The S&P 500 climbed 1.5% and the Italian MIB gained 3.7%. EUR/USD finished the day virtually flat but the yen was broadly weaker.

The IMF raised its global growth forecast to 3.5% from 3.3% (as rumored) and said US growth will be 2.2%, which is above its previous forecast but below the consensus. IMF officials said Spain and Italy are likely to miss deficit forecast by a significant margin.

The first notable report of the session comes at 0030 GMT when Westpac releases its leading index for Australia. In January, the index climbed 0.6%.

At 0130 GMT, China will release data on property prices for March. This is a relatively new report but it is quickly gaining attention because of the potential for Chinese housing to damage global growth.

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