Euro Drops, CAD Inflation Slips, Onto Retail Sales

http://www.ashraflaidi.com/forex-news/?a=2394

May 20, 2011 08:06 ET : Euro is weak across the board on lingering Greece & Spain concerns as well as a negative Bundesbank report. CAD Dragged by weak CPI, now awaiting retail sales.

Euro fell on a combination of prolonged concerns with Greece and Spain as well as a report from the Bundesbank indicating German weakness in the foreseeable future. Also weighing on EUR were remarks by Bank of Slovakia Jozef Makuch who is also on ECBs governing council , indicating
that inflation spike is temporary and inflation is well anchored in mid to longer term in EZ. EUR currently weak across the board and even higher German April PPI rose to 1.0% from last 0.4% and on annualized basis firmed up to 6.4% from previous 6.2% did not provide support.

In Canada, May CPI decreased significantly to 0.3% (0.5% exp.) from
last reading of 1.1%. Core CPI was also on the weak side at 0.2% (0.1%
exp.) from previous 0.7% slightly undermining the need to increase
interest rates before Q4. BoC meets 5 more times this year in May,
July, September, October and December.

Markets awaits Canadian Retail Sales at 8:30 am EDT, expecting an improvement to 0.9% from Aprils 0.4%. Positive reading would mark a back to back improvement after two negative readings in February and March. Core retail sales are expected to improve slightly from 0.7% to 0.8%.

Today there are no economic releases from the US.

In absence of news releases, trading is likely to be determined by
risk on/risk off sentiment and technical indicators will become more
important.

After a strong USD close last week, USD bulls were ready to keep
pushing higher. Most US economic releases this
week disappointed (with the exception of slightly better than expected
unemployment claims yesterday) so the sentiment started to shift. Over
the past three days USD closed at lower levels each day and unless
there is a large, USD positive move during today's trading, USD will
have lost most of its gains from last week. USD bulls are unlikely to
give up just yet. Also watch out from options expiry in the US today, which could add extra volatility to indices later in the session.

By PU -AshrafLaidi.com Staff