Forex Market Updates & Commentary

Bernanke downplays oil inflation in prepared text
Construction Spending Lower & ISM Data Slightly Better
ISM Manufacturing comes in stronger at 61.4
The NY Morning Forex Commentary
USDCAD moves initially higher on BOC decision
Rate remains unchanged. Statement from Bank of Canada
Canada Interest Rate Stays Unchanged
BOC Interest Rate decision awaited
Gold continues upward move. Tests resistance
Bobbys Corner-Open Market-March.1.2011
ISM & Constrution Spending Data due at 10AM
The NY Opening Forex Commentary/Register for Webinar
Eurozone CPI Flash Estimate & Unemployment Rate
UK net lending to indviduals, mortgage approvals, and M3 money supply
UK Manufacturing PMI as expected

Bernanke downplays oil inflation in prepared text

Posted: 01 Mar 2011 07:07 AM PST

He says it may cause temporary gain in inflation.

Other highlights of the prepared text include:

Sustained oil prices would threaten growth
Fed monitoring commodity prices closely
Job growth relatively weak
Evidence of sustained consumer spending
Somewhat rapid pace of growth in 2011
Jobs only improve slightly
Some optimism on jobs
Unemployment may not return to normal for years
Job growth essential
Housing exceptionally weak
QE has been effective

Construction Spending Lower & ISM Data Slightly Better

Posted: 01 Mar 2011 07:05 AM PST

Construction Spending MoM: Survey: -0.4% Actual: -.7% Prior: 0.4% Revised: -1.6%

ISM Manufacturing: Survey: 61.0 Actual: 61.4 Prior: 60.8

FEB vs. JAN
Production: 66.3 vs. 63.5
New Orders: 68.0 vs 67.8
Backlog of Orders: 59.0 vs 58.0
Supplier Deliveries: 59.4 vs 58.6
Inventory Change: 48.8 vs 52.4
Employment: 64.5 vs 61.7

ISM Prices Paid: Survey: 83.0 Actual: 82.0 Prior: 81.5

ISM Manufacturing comes in stronger at 61.4

Posted: 01 Mar 2011 07:02 AM PST

The ISM Manufacturing Index rose to 61.4 vs 60.8 last month. The expectation was for a rise to 61.0. The Prices Paid rose to 82 from 81.5 last month. The expectation was for 83.0. Below is the component pieces versus last months values. The Employment component and New Orders both rose but so did Prices Paid.

Manufacturing index 61.4 v 60.8
Prices paid 82.0 v 81.5
Production 66.3 v 63.5
New orders 68.0 v 67.8Backlog of orders 59.0 v 58.0
Supplier deliveries 59.4 v 58.6
Inventories 48.8 v 52.4
Customer inventories 40.0 v 45.5
Employment 64.5 v 61.7New export orders 62.5 v 62.0
Imports 55.0 v 55.0

The NY Morning Forex Commentary

Posted: 01 Mar 2011 06:42 AM PST

USDCAD moves initially higher on BOC decision

Posted: 01 Mar 2011 06:06 AM PST

The BOC kept there rate unchanged today at 1%. The pair has moved through trendline resistance at the 0.9714 level and this will now be watched as short term support by intraday traders looking for a temporary bottom in the pair. The upside target is channel resistance at the 0.9755 level. A move above that targets teh 0.9788 level.

Rate remains unchanged. Statement from Bank of Canada

Posted: 01 Mar 2011 06:01 AM PST

Bank of Canada maintains overnight rate target at 1 per cent OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent. The global economic recovery is proceeding broadly in line with the Bank's projection in its January Monetary Policy Report (MPR), although risks remain elevated. U.S. activity is solidifying and remains supported by stimulative fiscal and monetary policies. Ongoing challenges associated with sovereign and bank balance sheets will limit the pace of the European recovery and are a significant source of uncertainty to the global outlook. Robust demand from emerging-market economies is driving the underlying strength in commodity prices, which could be further reinforced temporarily by supply shocks arising from recent geopolitical events. The recovery in Canada is proceeding slightly faster than expected, and there is more evidence of the anticipated rebalancing of demand. While consumption growth remains strong, there are signs that household spending is moving more in line with the growth in household incomes. Business investment continues to expand rapidly as companies take advantage of stimulative financial conditions and respond to competitive imperatives. There is early evidence of a recovery in net exports, supported by stronger U.S. activity and global demand for commodities. However, the export sector continues to face considerable challenges from the cumulative effects of the persistent strength in the Canadian dollar and Canada's poor relative productivity performance. While global inflationary pressures are rising, inflation in Canada has been consistent with the Bank’s expectations. Underlying pressures affecting prices remain subdued, reflecting the considerable slack in the economy. Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered.

Canada Interest Rate Stays Unchanged

Posted: 01 Mar 2011 06:01 AM PST

Bank of Canada Keeps its interest rate unchanged at 1%

BOC Interest Rate decision awaited

Posted: 01 Mar 2011 05:56 AM PST

This is the last comments following the BOC rate decision on January 18th

“Bank of Canada maintains overnight rate target at 1 per cent
OTTAWA –The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The global economic recovery is proceeding at a somewhat faster pace than the Bank had anticipated, although risks remain elevated. Private domestic demand in the United States has picked up and will be reinforced by recently announced monetary and fiscal stimulus. European growth has also been slightly stronger than anticipated. Ongoing challenges associated with sovereign and bank balance sheets will limit the pace of the European recovery and are a significant source of uncertainty to the global outlook. In response to overheating, some emerging markets have begun to implement more restrictive policy measures. Their effectiveness will influence the path of commodity prices, which have increased significantly since the October Monetary Policy Report (MPR), largely reflecting stronger global growth.

The recovery in Canada is proceeding broadly as anticipated, with a period of more modest growth and the beginning of the expected rebalancing of demand. The contribution of government spending is expected to wind down this year, consistent with announced fiscal plans. Stretched household balance sheets are expected to restrain the pace of consumption growth and residential investment. In contrast, business investment will likely continue to rebound strongly, owing to stimulative financial conditions and competitive imperatives. Net exports are projected to contribute more to growth going forward, supported by stronger U.S. activity and global demand for commodities. However, the cumulative effects of the persistent strength in the Canadian dollar and Canada's poor relative productivity performance are restraining this recovery in net exports and contributing to a widening of Canada's current account deficit to a 20-year high.

Overall, the Bank projects the economy will expand by 2.4 per cent in 2011 and 2.8 per cent in 2012 – a slightly firmer profile than had been anticipated in the October MPR. With a little more excess supply in the near term, the Bank continues to expect that the economy will return to full capacity by the end of 2012.

Underlying pressures affecting prices remain subdued, reflecting the considerable slack in the Canadian economy. Core inflation is projected to edge gradually up to 2 per cent by the end of 2012, as excess supply in the economy is slowly absorbed. Inflation expectations remain well-anchored. Total CPI inflation is being boosted temporarily by the effects of provincial indirect taxes, but is expected to converge to the 2 per cent target by the end of 2012.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered.

Gold continues upward move. Tests resistance

Posted: 01 Mar 2011 05:48 AM PST

Bobbys Corner-Open Market-March.1.2011

Posted: 01 Mar 2011 05:23 AM PST

Good Morning:

FX markets kept rates range bound-but it was a busy morning of data and activity.
Manufacturing data in the Euro Zone showed a robust number-which is the highest reading in 11 years, and confirmed the estimates that analyst had expected. This data also helped keep German unemployment lower. The unemployment rate has now dropped to 7.3% in Germany. This is an indication that growth in the region continues to expand-and hopefully the economic recovery in Germany will spread to the smaller EU nations.
In Australia-the RBA kept interest rates unchanged at 4.75%-which was expected.

World equity markets are higher-as are US Futures.

Oil:$97.73 Gold:$1418.40

TME FOR EST. PRIROR

10:00A.M. CONSTRUCTION SPENDING MoM JAN. -0.40% -2.50%

10:00A.M. ISM MANUFACTURING FEB. 6O.8 6O.8

10:00A.M. ISM PRICES PAID FEB. 82.5O 81.5O

10:00A.M. BERNANKE SPEAKS BEFORE SENATE

BANKING COMMITTEE.

HAVE A GREAT DAY & GOOD LUCK

ISM & Constrution Spending Data due at 10AM

Posted: 01 Mar 2011 04:55 AM PST