Friday, July 29, 2011

Canada Economy

Totally lost in the shuffle today was the weak econodata from Canada. May GDP was negative 0.3% and mostly attributed to oil and gas industries' slowdown. I wrote a piece earlier discussing this phenomenon of Canada's economy direct correlation to oil and US economy

CAD dove on this news, and traders are now focused on rate hike being less likely. To make things even worse for those who expected a hike, this morning Canadian wholesale prices report showed a decline vs expected rise, and by a lot I would say. Bummer!!
Not a surprise folks. Mr. Carney's comments from June gave us the hint. Somehow we knew well in advance...

This development takes care of one of the closest stock market-correlated currencies. Plot CAD over SPX and you will see what I mean. This is a hint where SPX is heading.
Furthermore, it will help DXY to bottom.

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