| 3/4/2008
6:00 PM: EUR/$..1.5205 $/JPY..103.38 GBP/$..1.9854
$/CHF..1.0393 AUD/$..0.9252 $/CAD..0.9938
CAD, AUD Slip following Central Bank
moves
The greenback remained mired near its lows against
the euro and yen amid a dearth of fresh US economic
data. The reports resume on Wednesday as traders
turn to a barrage of US data, including the February
ADP employment, Q4 labor cost, Q4 productivity,
January factory orders, February non-manufacturing
ISM, and revised January durable goods orders.
The ADP employment figure is not seen significantly
impacting currency pairs, given last month?s sharp
inconsistency between the ADP and non-farm payrolls
? in which the ADP revealed 130k in jobs creation
while the NFP figure contracted by 17k. Nonetheless,
tomorrow?s ADP employment figure is seen falling
to 20k, versus 130k in January. Factory orders
in January are seen contracting by 2.5% versus
an increase of 2.3% a month prior. Meanwhile,
the February non-manufacturing ISM report is forecasted
to improve to 47.0 from 41.9 a month earlier.
Loonie Slips after Rate Cut
The Bank of Canada slashed its benchmark lending
rate by 50-basis points to 3.5% -- its largest
ease in 7-years. The BoC also signaled the possibility
for further policy easing over the coming months.
The accompanying Bank statement reflected growing
apprehension about a ?deeper and more prolonged
slowdown? in the US, which ?suggests that important
downside risks to Canada?s economic outlook that
were identified in the January Monetary Policy
report update are materializing and intensifying?.
The Bank also added that ?further monetary stimulus
is likely required in the near term?. The dovish
commentary from the BoC indicates at least another
50-basis point ease may be on tap at the Bank?s
next meeting.
Aussie Struggles despite RBA Hike
The Australian dollar continued to retreat away
from its 24-year highs against the greenback falling
to 0.9216 in the Tuesday session. Market expectations
for additional policy tightening were tempered
after the RBA delivered its post-meeting statement.
Although the Reserve Bank of Australia tightened
monetary policy with a 25-basis point rate hike
to 7.25%, traders sold the Aussie on a more dovish
delivered by the RBA. In the statement, the RBA
said ?there is tentative evident that some moderation
in household demand is beginning to occur, with
business and consumer sentiment softer recently,
and household credit demand slowing somewhat?.
Further, the Bank stated that due to recent rate
hikes and ?rises in borrowing costs which are
occurring independently of changes in the cash
rate, the overall tightening in financial conditions
since the middle of 2007 is substantial?. As a
result, we look for possibly another 25-basis
point rate hike from the RBA in the second half
of the year.
|
