chfjpy

Caught a few pips off this pair but it lack momentum so i belive the slide  down will continue

too 85.82 target

Gross Domestic Product, 1st quarter 2012 (advance estimate)

Real gross domestic product -- the output of goods and services produced by labor and property
located in the United States -- increased at an annual rate of 2.2 percent in the first quarter of 2012 (that
is, from the fourth quarter to the first quarter), according to the "advance" estimate released by the
Bureau of Economic Analysis.  In the fourth quarter of 2011, real GDP increased 3.0 percent.

      The Bureau emphasized that the first-quarter advance estimate released today is based on source
data that are incomplete or subject to further revision by the source agency (see the box on page 3).  The
"second" estimate for the first quarter, based on more complete data, will be released on May 31, 2012.

      The increase in real GDP in the first quarter primarily reflected positive contributions from
personal consumption expenditures (PCE), exports, private inventory investment, and residential fixed
investment that were partly offset by negative contributions from federal government spending,
nonresidential fixed investment, and state and local government spending.  Imports, which are a
subtraction in the calculation of GDP, increased.

      The deceleration in real GDP in the first quarter primarily reflected a deceleration in private
inventory investment and a downturn in nonresidential fixed investment that were partly offset by
accelerations in PCE and in exports.
___________________
BOX.
     Annual Revision of the National Income and Product Accounts

      The annual revision of the national income and product accounts (NIPAs), covering the first
quarter of 2009 through the first quarter of 2012, will be released along with the "advance" estimate of
GDP for the second quarter of 2012 on July 27, 2012.  The August Survey of Current Business will
contain an article that describes the annual revision in detail.
___________________

FOOTNOTE.  Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise
specified.  Quarter-to-quarter dollar changes are differences between these published estimates.  Percent
changes are calculated from unrounded data and are annualized.  "Real" estimates are in chained (2005)
dollars.  Price indexes are chain-type measures.

      This news release is available on BEA’s Web site along with the Technical Note and Highlights related to this release.
___________________

      Motor vehicle output added 1.12 percentage points to the first-quarter change in real GDP after
adding 0.47 percentage point to the fourth-quarter change.  Final sales of computers added 0.05
percentage point to the first-quarter change in real GDP after adding 0.12 percentage point to the fourth-
quarter change.

      The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 2.4 percent in the first quarter, compared with an increase of 1.1 percent in the fourth.
Excluding food and energy prices, the price index for gross domestic purchases increased 2.2 percent in
the first quarter, compared with an increase of 1.2 percent in the fourth.

      Real personal consumption expenditures increased 2.9 percent in the first quarter, compared with
an increase of 2.1 percent in the fourth.  Durable goods increased 15.3 percent, compared with an
increase of 16.1 percent.  Nondurable goods increased 2.1 percent, compared with an increase of 0.8
percent.  Services increased 1.2 percent, compared with an increase of 0.4 percent.

      Real nonresidential fixed investment decreased 2.1 percent in the first quarter, in contrast to an
increase of 5.2 percent in the fourth.  Nonresidential structures decreased 12.0 percent, compared with a
decrease of 0.9 percent.  Equipment and software increased 1.7 percent, compared with an increase of
7.5 percent.  Real residential fixed investment increased 19.1 percent, compared with an increase of 11.6
percent.

      Real exports of goods and services increased 5.4 percent in the first quarter, compared with an
increase of 2.7 percent in the fourth.  Real imports of goods and services increased 4.3 percent,
compared with an increase of 3.7 percent.

      Real federal government consumption expenditures and gross investment decreased 5.6 percent
in the first quarter, compared with a decrease of 6.9 percent in the fourth.  National defense decreased
8.1 percent, compared with a decrease of 12.1 percent.  Nondefense decreased 0.6 percent, in contrast to
an increase of 4.5 percent.  Real state and local government consumption expenditures and gross
investment decreased 1.2 percent, compared with a decrease of 2.2 percent.

      The change in real private inventories added 0.59 percentage point to the first-quarter change in
real GDP after adding 1.81 percentage points to the fourth-quarter change.  Private businesses increased
inventories $69.5 billion in the first quarter, following an increase of $52.2 billion in the fourth quarter
and a decrease of $2.0 billion in the third.

      Real final sales of domestic product -- GDP less change in private inventories -- increased 1.6
percent in the first quarter, compared with an increase of 1.1 percent in the fourth.


Gross domestic purchases

      Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 2.1 percent in the first quarter, compared with an increase of 3.1 percent in the
fourth.


Disposition of personal income

      Current-dollar personal income increased $119.6 billion (3.7 percent) in the first quarter,
compared with an increase of $105.3 billion (3.3 percent) in the fourth.

      Personal current taxes increased $38.6 billion in the first quarter, compared with an increase of
$21.1 billion in the fourth.

      Disposable personal income increased $81.0 billion (2.8 percent) in the first quarter, compared
with an increase of $84.2 billion (2.9 percent) in the fourth.  Real disposable personal income increased
0.4 percent, compared with an increase of 1.7 percent.

      Personal outlays increased $145.9 billion (5.3 percent) in the first quarter, compared with an
increase of $86.4 billion (3.1 percent) in the fourth.  Personal saving -- disposable personal income less
personal outlays -- was $466.0 billion in the first quarter, compared with $530.8 billion in the fourth.
The personal saving rate -- saving as a percentage of disposable personal income -- was 3.9 percent in
the first quarter, compared with 4.5 percent in the fourth.  For a comparison of personal saving in BEA’s
national income and product accounts with personal saving in the Federal Reserve Board’s flow of funds
accounts and data on changes in net worth, go to www.bea.gov/national/nipaweb/Nipa-Frb.asp.


Current-dollar GDP

      Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
3.8 percent, or $142.4 billion, in the first quarter to a level of $15,461.8 billion.  In the fourth quarter,
current-dollar GDP also increased 3.8 percent, or $143.3 billion.


_____________________________
BOX.
     Information on the assumptions used for unavailable source data is provided in a technical note
that is posted with the news release on BEA's Web site.  Within a few days after the release, a detailed
"Key Source Data and Assumptions" file is posted on the Web site.  In the middle of each month, an
analysis of the current quarterly estimate of GDP and related series is made available on the Web site;
click on Survey of Current Business, "GDP and the Economy."
_____________________________

      BEA's national, international, regional, and industry estimates; the Survey of Current Business;
and BEA news releases are available without charge on BEA's Web site at www.bea.gov. By visiting the
site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.

Definition of 'Tight Monetary Policy'

A course of action undertaken by the Federal Reserve to constrict spending in an economy that is seen to be growing too quickly, or to curb inflation when it is rising too fast. The Fed will "make money tight" by raising short-term interest rates (also known as the Fed funds, or discount rate), which increases the cost of borrowing and effectively reduces its attractiveness. 

Read more: http://www.investopedia.com/terms/t/tightmonetarypolicy.asp#ixzz1tCMXwOiv

Investopedia explains 'Tight Monetary Policy'

The Fed can sell Treasuries on the open market in order to absorb some extra capital during a tight monetary policy. This effectively takes capital out of the open markets as the Fed takes in funds from the sale with the promise of paying the amount back with interest. The Fed will often look at tightening monetary policy during times of strong economic growth.  

Easy monetary policy
Read more: http://www.investopedia.com/terms/t/tightmonetarypolicy.asp#ixzz1tCMns2CE

A central bank policy designed to stimulate economic growth by lowering short term interest rates, making money less expensive to borrow. also called accommodative monetary policy or loose credit. opposite of tight monetary policy.

Read more: http://www.investorwords.com/1630/easy_monetary_policy.html#ixzz1tCNFdJ1t

economist

http://www.economist.com/node/21553015

Audusd which was a bit of a touch and go

Australian inflation printed markedly cooler than expectations sending Aussie lower in Asian session trade. On a quarterly basis Australian CPI came in at 0.1% versus 0.7% forecast while Trimmed mean CPI was 0.3% versus 0.6% anticipated. On a yearly basis the trimmed-mean inflation rate dropped to 2.2% from 2.6% and the weighted-median rate fell to 2.1% from 2.5%.

The substantial reduction in the rate of inflation was driven by lower food and travel costs while energy, education and pharmaceutical costs continued to rise. Overall the sharp reduction in the yearly rate of inflation of 40 basis points suggests that a rate cut from the RBA is nearly assured at the next meeting in May. Presently the market is pricing nearly 100bp in rate cuts from the RBA by year end which would significantly reduce Aussie’s interest rate advantage in the G10 universe.

The AUD/USD fell to a session low of 1.0247 in morning Asian trade but managed to stay above the yearly lows of 1.0225 rebounding to 1.0290 in early European dealing. For the time being the market appears to have priced in the immediate 25bp rate cut and the pair could rally towards the 1.0300 level if risk flows turn positive for the rest of the day. However, the longer term picture for Aussie remains quite negative as the pair continues to lose its attraction on the carry trade basis with every new reduction in the benchmark rate. A test of yearly lows at 1.0225 could open the way for a move towards parity over the intermediate term horizon. fx360 news

Follow up on the Audusd which was a bit of a touch and go and formed a head and shoulders on the hrly time Frame

i Managed to keep my long order @1.0329 now @ break even

lets wait and see what happens

Canadian dollar

The Canadian dollar dipped in morning trading but by afternoon had erased its losses, and closed the day with a gain of 16 basis points to US$1.0091.
“Political wrangling over budget cuts in the Netherlands unsettled markets Monday, as investors worried about that nation’s ability to retain a triple-A credit rating. But a shrinking pool of safe-haven countries is music to the Canadian dollar’s ears, as it generally outperformed, despite weak commodity prices,” said BMO Capital Markets economist Sal Guatieri.
“After France and Austria were downgraded earlier this year by S&P, Canada is among a select group of about a dozen countries that are deemed triple-A by all three major rating agencies.”

EurUSD

Risk FX slipped lower on the first trading day of the week on raised investor concerns that Eurozone may now be facing its third consecutive quarter  of contraction in the wake of much weaker than expected flash PMI readings from the region. German combined flash PMI data for April missed its mark badly printing at 50.9 versus 51.6 in March  as the Manufacturing sector recorded its lowest reading in more than 33 months. German PMI Manufacturing came in at 46.3 versus forecasts of 49.0 as exports showed their steepest decline since last November. French data was weaker as well with both services and manufacturing data also missing estimates.
The weak PMI reports suggest that growth in core European economies is in peril undermining any expectations of a rebound to positive GDP in Q2 of this year. German composite PMI tends to be a strong leading indicator to overall GDP growth and as it teeters on the edge of the 50 boom/bust line it indicates that Europe’s leading economy main remain in recession for the near term. Overall EZ PMI printed at 47.4 – well below the key 50 level and considerably lower than 49.1 the month prior.
In short, the situation in the EZ points to further slowdown in economic activity and stands at sharp contrast to the IFO sentiment survey released last Friday. Historically the PMI data tends to lead  the IFO survey. Furthermore as additional austerity measures are implemented in Club Med countries, the deterioration in aggregate demand will only exacerbate putting further pressure on the core which could continue to inflame the region’s credit markets driving the EUR/USD lower as the summer proceeds.
Elsewhere, Australian PPI printed at -0.3% versus 0.5% indicating a significant slowdown in wholesale inflation. If the data is borne out by CPI readings due later tonight the RBA would face no further barriers towards easing rates at its next meeting in May. Australian monetary authorities have already hinted that their decision to lower rates would depend in easing of inflationary pressures and given tonight’s reports a 25 bp cut appears to be assured in May. Aussie slipped below 1.0300 as the prospect of  a rate cut and broad risk aversion flows weighed on the pair.
With no US data on the calendar today, the negative risk sentiment from Europe may extend into North American session today. If risk aversion flows accelerate EUR/USD is likely to drift lower testing support at the 1.3100 level as investor sentiment towards  the region continues to sour in wake of disappointing economic data. 

byfx360

Dollar and yen extend this week's recovery as sentiments were further weighed down by poor Eurozone data today, which suggests deeper and steeper contraction in Eurozone economies. Eurozone manufacturing PMI dropped to 46.0 in April, much worse than expectation of a rise to 48.1 and was the lowest number in 34 months. Eurozone services PMI dropped to a 47.9 versus expectation of 49.3, hitting a five month low. German PMI manufacturing dropped sharply to 46.3 versus expectation of 49.0, lowest since July 2009 even though services PMI unexpectedly improved to 52.6. France PMI manufacturing rose slightly less than expected to 47.3 but services PMI dropped from 50.1 to 46.3. Chief economist at Markit Chris Williamson said that the data "signaled a faster rate of economic contraction in the euro zone during April, extending what appears to be a double-dip recession into a third consecutive quarter."
French presidential election also weighed down sentiments. In the first round of France's presidential vote, current president Sarkozy came in second to Socialist Hollande. Hollande won 28.5% of vote while Sarkozy won 27.1%. A surprise in the market was that anti0immigrant Le Pen won 18.1% vote, a record for the party. The second round takes place on May 6. Hollande is having a slight upper hand and some analysts are cautious that certain policies that Hollande promotes would create friction with other major countries. A major concern is that Hollande has made himself clear that he will seek to renegotiate the fiscal pact agreed by EU leaders and shift the focus from austerity to growth.

gbpjpy

see gbp and jpy blogs 4 news

Eurjpy looking for support

 EurJPY looking for support if pull back is Held Looking to swing Long

USDCAD On the watch List

NICE Movement and it has held support ABCD scernario in Play
On the watch List

Canadian dollar: The net long position rose by 10k contracts, which almost completely reflect new longs coming into the market (10.3k), while short rose by almost 300 contracts. The new longs were likely disappointed. They may have initially been encouraged by the upgraded economic assessment offered by the central bank at the conclusion of its policy meeting that stood pat (April 17), but there was no follow through gains.

While technical and fundamental factors seem to favor the Canadian dollar, the risk is that more signs that the US economy, especially the manufacturing sector, is slowing (after running ahead of demand) will lead the under-performance compared with most of the other major currencies.

Audusd 4hrs back in play?

lOOKING TO LONG THIS PAIR AT E 1.3000

however still aware that down ward channel still exist and looming with possiable
 instrest cuts from the RBA need to watch for CPI figuers

Aussie is so far the weakest currency this week as weighed down by mild risk aversion and weak PPI data. PPI unexpectedly dropped -0.3% in Q1 versus expectation of 0.5% qoq rise. Year-over-year rate also slowed sharply from 2.9% to 1.4% versus consensus of 2.2%. The data confirmed that there is no upstream price pressures in the Australia economy. Tuesday's CPI data will be closely watched and is expected to show 0.7% qoq rise in Q1. Markets are widely expecting 25bps cut in next week's RBA meeting. Weak CPI data will add to speculation that RBA would either cut 50bps this month, or by another 25bps next month

however

Australian dollar: The net long position increased by about 9k contracts to 48.4k. Longs grew for the first time in a month (4k). Shorts were cut by 5k contracts. The Australian dollar recorded the week's lows on April 17 and retested it just before the the weekend.

The Reserve Bank of Australia is the only G10 central bank, besides the BOJ, to be set to ease monetary policy. Although the inflation figures due out in the coming days are seen as key, the collapse of the terms of trade in Q1 would seem to suggests an easing of price pressures. Market indications, such as the Overnight Index Swaps (OIS) suggest that almost 100 bp has been discounted over the next 12-months. Here too the technical factors seem more supportive than fundamentals. A move now above $1.0420 would suggest a bottom is in place and encourage momentum players to look for $1.05-$1.06.

24/04/2012
Results from the CPI data cause anf effect

hey are the big boyz pulling this pair back into play?

Australian inflation printed markedly cooler than expectations sending Aussie lower in Asian session trade. On a quarterly basis Australian CPI came in at 0.1% versus 0.7% forecast while Trimmed mean CPI was 0.3% versus 0.6% anticipated. On a yearly basis the trimmed-mean inflation rate dropped to 2.2% from 2.6% and the weighted-median rate fell to 2.1% from 2.5%.

The substantial reduction in the rate of inflation  was driven by lower food and travel costs while energy, education and pharmaceutical costs continued to rise. Overall the sharp reduction in the yearly rate of inflation of 40 basis points suggests that a rate cut from the RBA is nearly assured at the next meeting in May. Presently the market is pricing nearly 100bp in rate cuts from the RBA by year end which would significantly reduce Aussie’s interest rate advantage  in the G10 universe.

The AUD/USD  fell to a session low of 1.0247 in morning Asian trade but managed to stay above the yearly lows of 1.0225 rebounding to 1.0290 in early  European dealing. For the time being the market appears to have priced in the immediate 25bp rate cut and the pair could rally towards the 1.0300 level if risk flows turn positive for the rest of the day.  However, the longer term picture for Aussie remains quite negative as the pair continues to lose its attraction on the carry trade basis  with every new reduction in the benchmark rate. A test of yearly lows at 1.0225 could open the way for a move towards parity over the intermediate term horizon.       fx360 news

CPI

Some Uses of the CPI
The CPI is often used to adjust consumer income payments for changes in the dollar's value and to adjust other economic series. Social Security ties the CPI to income eligibility levels; the federal income tax structure relies on the CPI to make adjustments that avoid inflation-induced increases in tax rates and finally, employers use the CPI to make wage adjustments that keep up with the cost of living. Data series on retail sales, hourly and weekly earnings and the national income and product accounts are all tied to the CPI to translate the related indexes into inflation-free terms.



Read more: http://www.investopedia.com/articles/04/102004.asp#ixzz1slTeVFwB



The CPI and the Markets Movements in the prices of goods and services most directly affect fixed-income securities. If prices are rising, fixed bond payments are worthless, effectively lowering the bonds' yields. Inflation also poses a serious problem to holders of fixed annuities and pension plans, as it erodes the effective value of the fixed payments. Many retirees have watched their pension payment amounts lose buying power over time.

Price volatility can be bad for equities as well. Modest and steady inflation is to be expected in a growing economy, but if the prices of resources used in the production of goods rise quickly, manufacturers may experience profit declines. On the other hand, deflation can be a negative sign indicating a decline in consumer demand. In this situation, manufacturers are forced to drop prices to sell their products, but the resources and commodities used in production may not fall by an equivalent amount. Again, the companies' margins are squeezed due to the stickiness of prices for some items and the elasticity of prices for other items.

Protecting Against Inflation Fortunately, as the financial markets have become more sophisticated over time, investment products have been created to help even the average person hedge inflation risk. Mutual funds, or banks, concerned about rising inflation might purchase special inflation protected bonds known as TIPS. (You can read more on TIPS in Inflation Protected Securities - The Missing Link.) Furthermore, the Chicago Mercantile Exchange offers futures contracts on the CPI, which can be used to hedge inflation. These contracts also provide useful information about the market consensus for prices in the future.


Read more: http://www.investopedia.com/articles/04/102004.asp#ixzz1slTP1z00

Definition of 'Consumer Price Index - CPI'

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living.


Read more: http://www.investopedia.com/terms/c/consumerpriceindex.asp#ixzz1slTsIe3E

GBP

Will Inflation Data Act to Tie the Hands of the BOE?

The Bank of England has an important decision to make in the coming month, at its May interest-rate decision where the Monetary Policy Committee must decide whether to continue it’s quantitative easing bond purchase program, or to pause it at its current £325 billion.

We know from the previous BOE minutes that 2 members – Adam Posen and David Miles – voted for a £25 billion increase to the QE program, but that was before a run of better-than-expected PMI reports which could give the area slightly more upbeat assessment of economic conditions.

While a strengthening economy – even relatively speaking – would be one reason to pause QE, another impediment could be inflationary pressures which may remain more stubborn than the BOE expected.

In late March we had 2 BOE members – Martin Weale and Spencer Dale – talk about the “risks that there may be more persistence to inflation” and that “inflation may not slow as fast this year as MPC forecast due to rising energy prices.” well there remain significant risks the downside footing a deterioration in Europe, elevated bank funding costs, and higher borrowing costs on consumers, will the Bank of England continue to use is nonstandard measures to try and help growth. What if that comes at the expense of heightened inflation?

Most recently the data has shown the annual CPI rate fall quite dramatically – from 5.2% to 3.4% in annual terms – but the expectation is that for March annual CPI will post a 3.5% reading. That remains far above the central banks preference for prices. The Bank of England has expected inflation to cool going forward because of spare capacity in the economy, but I wonder if it considers the diminishing returns from the each new successive round of bond buying.

On Wednesday we will get further insight into the thinking of the BOE when it releases its Meeting Minutes, at the same time that we get the latest round of data from the labor market – the Achilles’ heel of the UK economy.

But before that we anticipate the CPI data. If prices come in stronger-than-expected it could bolster the case of those committee members who do not feel more bond purchases are necessary and therefore would tie the hands of the BOE. Such a development would be a positive for the GBP other factors held equal.

If inflation cools below its level in February, then this impediment to more QE lessens. The CPI data will therefore be the curtain opener for a busy week of fundamentals for the UK economy, and can give us further insight into the direction of the GBP.

If at the end of it, we see the chances of the BOE holding its fire on more QE rising, I will be most interested in the impact on that EUR/GBP as it trades near a critical support level and if broken could open up further downside targets including the lows from 2010 (at 0.8140 and 0.8070).

FXtimes

Friday 11:00 AM With the BOJ under criticism for worrying more about the state of its balance sheet than the economy, ZH goes to the tape. Turns out, the BOJ's assets foot to nearly 30% of the Japanese economy (compared to the Fed's 19%), suggesting years of modest easing have bloated the balance sheet, but done nothing to reverse deflation. Expect the next easing to be a big one.

Comment!

[Global & FX

jpy

On Thursday, BoJ Governor Masaaki Shirakawa said the central bank was “committed” to monetary easing in order to meet Japan’s 1% targeted rate of inflation.

Also Thursday, preliminary data showed that Japan posted a record JPY4.41 trillion trade deficit for the fiscal year ending on March 31, as imports of oil and gas to produce electricity increased, with most of the country’s nuclear reactors still offline.

In the U.S., data on Thursday showed that manufacturing activity in the Philadelphia-region expanded at a slower rate than expected in April and U.S. existing home sales declined unexpectedly last month.

The data came after a government report showing that the number of people who filed for unemployment assistance in the U.S. last week fell less-than-expected, while the previous week’s figure was revised higher.

The Department of Labor said the number of individuals filing for initial jobless benefits in the week ending April 14 fell by 2,000 to a seasonally adjusted 386,000, disappointing expectations for a decline of 18,000 to 370,000.

As for the outlook for the economy, members shared the view that -- in line with

the interim assessment made in January 2012 -- Japan's economy was likely to gradually

emerge from the current phase of flat growth and return to a moderate recovery path as the

pace of recovery in overseas economies picked up, led by emerging and

commodity-exporting economies, and as reconstruction-related demand after the earthquake

disaster gradually strengthened. Many members noted that production and public

investment had recently begun to show signs of a possible pick-up in the coming period.

One of these members said that one year had passed since the earthquake and economic

activity had almost returned to the pre-quake level. The member continued that this

marked an important phase for the economy, in which the momentum for self-sustained

recovery would be tested.

AT the monent GBPUSD is near Monthly Resistance ..Howevr i will be looking to buy this pair on a pull back if i can get it

23/.4/2012

Sterling: Speculators got the sterling move right. The net short position fell to 13.1k from 18.8k as shorts were cut (2.3k) and longs were extended (3.4k). And just in the nick of time. Less dovish MPC minutes, stronger than expected retail sales report, some M&A flows and cross rate buying against the euro, helped lift sterling to new 2012 highs above $1.61 in the days that followed the end of the CFTF reporting period.

Sterling's technical tone, like the euro's, looks better than the fundamental backdrop. The UK economy has spent the past 6 quarters alternating between a small expansion and small contraction. The fourth quarter of 2011 was an contraction so Q1 12 will likely be a small expansion. It will be reported on April 25.

The fact that a new round of asset purchases is less likely than the market previously thought (though a wait-and-see attitude has been our base case) does not reflect a more optimistic assessment of the economy as much as realization that inflation remains stickier. Yet technically, the sterling can test the $1.6180 near-term, but has potential to run toward $1.6350-$1.6400.

CAD,JPY

Friday 11:00 AM With the BOJ under criticism for worrying more about the state of its balance sheet than the economy, ZH goes to the tape. Turns out, the BOJ's assets foot to nearly 30% of the Japanese economy (compared to the Fed's 19%), suggesting years of modest easing have bloated the balance sheet, but done nothing to reverse deflation. Expect the next easing to be a big one.

Comment! [Global & FX

Canadian Inflation Just Right

Canadian inflationary pressures eased in March. Both headline and the Bank of Canada's core measure of inflation rose 1.9% from year-ago levels, following respective gains of 2.6% and 2.3% in the prior month.

The deceleration in headline inflation was largely broad based, however, easing food and energy prices gave the most relief to households in the month. Following a year of rapid growth, food price inflation eased to 2.3% in March - almost half the pace in February. While food prices did decline in the March, the deceleration in annual food price inflation more so reflected a base year effect of a one-month spike this time last year when bad weather in Mexico and the southern U.S. restricted supply of fresh vegetables. Gasoline (+6.6%) and electricity, water and fuel (+3.5%) price inflation moderated significantly in the month, but continued to grow at a firm pace.

Also notable was a sharp deceleration in the prices for clothing and footwear, which rose 0.5% in the month compared to 2.8% in the prior month. The price of durable goods fell by 0.9% from year-ago levels, led by an outsized 2.9% decline in prices for household furnishings and equipment.

Recreation and education and alcohol were the only two categories were accelerating inflationary pressures were visible.

Key Implications

For the first time in over a year, inflation grew at a slower pace than wages - albeit modestly so. Households are still likely feeling the pinch from elevated food price and high costs at the pumps, but at least upward momentum has eased. With commodity price growth starting to slow, Canadian consumer price inflation should continue to hover around the Bank of Canada's target of 2.0%.

Overall, inflation in March is consistent with the outlook presented in the Bank of Canada's monetary policy report earlier this week. With inflation neither too hot nor too cold, the Bank of Canada has breathing room to keep rates low over the next few months, but prepare for a possible rate hike come the fall.

the international price of oil has risen further and is now considerably higher than that received by Canadian producers. If sustained, these oil price developments could dampen the improvement in economic momentum.

Overall, economic momentum in Canada is slightly firmer than the Bank had expected in January. The external headwinds facing Canada have abated somewhat, with the U.S. recovery more resilient and financial conditions more supportive than previously anticipated. As a result, business and household confidence are improving faster than forecast in January. The Bank projects that private domestic demand will account for almost all of Canada’s economic growth over the projection horizon. Household spending is expected to remain high relative to GDP as households add to their debt burden, which remains the biggest domestic risk. Business investment is projected to remain robust, reflecting solid balance sheets, very favourable credit conditions, continuing strong terms of trade and heightened competitive pressures. The contribution of government spending to growth is expected to be quite modest over the projection horizon, in line with recent federal and provincial budgets. The recovery in net exports is likely to remain weak in light of modest external demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.

The Bank projects that the economy will grow by 2.4 per cent in both 2012 and 2013 before moderating to 2.2 per cent in 2014. The degree of economic slack has been somewhat smaller than the Bank had anticipated in January, and the economy is now expected to return to full capacity in the first half of 2013.

As a result of this reduced slack and higher gasoline prices, the profile for inflation is expected to be somewhat firmer than anticipated in January. After moderating this quarter, total CPI inflation is expected, along with core inflation, to be around 2 per cent over the balance of the projection horizon as the economy reaches its production potential, the growth of labour compensation remains moderate, and inflation expectations stay well-anchored.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2 per cent inflation target over the medium term. The timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments.

JPY

The U.S. dollar ended the week higher against the broadly weaker yen, as speculation that the Bank of Japan is set to announce new stimulus measures to bolster growth weighed. USD/JPY hit 81.60 on Friday, the pair’s highest since April 10; the pair subsequently consolidated at 81.49 by close of trade on Friday, gaining 0.80% over the week.The pair is likely to find support at 80.81, the low of April 13 and resistance at 82.54, the high of April 6.

On Thursday, BoJ Governor Masaaki Shirakawa said the central bank was “committed” to monetary easing in order to meet Japan’s 1% targeted rate of inflation.

Also Thursday, preliminary data showed that Japan posted a record JPY4.41 trillion trade deficit for the fiscal year ending on March 31, as imports of oil and gas to produce electricity increased, with most of the country’s nuclear reactors still offline.

In the U.S., data on Thursday showed that manufacturing activity in the Philadelphia-region expanded at a slower rate than expected in April and U.S. existing home sales declined unexpectedly last month.

The data came after a government report showing that the number of people who filed for unemployment assistance in the U.S. last week fell less-than-expected, while the previous week’s figure was revised higher.

The Department of Labor said the number of individuals filing for initial jobless benefits in the week ending April 14 fell by 2,000 to a seasonally adjusted 386,000, disappointing expectations for a decline of 18,000 to 370,000.

The previous week’s figure was revised up to 388,000 from 380,000

BOC:

Oil and gas

Regarding recent developments in the economy, members agreed that -- in line

with the interim assessment made in January 2012 -- Japan's economic activity had

remained more or less flat, although it had shown some signs of picking up. They shared

the view that exports and production continued to be more or less flat, mainly due to the

effects of the slowdown in overseas economies and the yen's appreciation. They

concurred that business fixed investment had been on a moderate increasing trend, aided by

the restoration of disaster-stricken facilities. As a favorable factor, a few members pointed

out that business sentiment had improved recently in a situation where stock prices were

rising and the yen was depreciating. One of these members added that the level of

business fixed investment relative to firms' cash flow was still constrained, and this member

was paying attention to whether investment would increase amid the improvement in

business sentiment. Members shared the view that private consumption had firmed up due

in part to the effects of measures to stimulate demand for automobiles. They agreed that

housing investment had generally been picking up and public investment had stopped

declining.

As for the outlook for the economy, members shared the view that -- in line with

the interim assessment made in January 2012 -- Japan's economy was likely to gradually

emerge from the current phase of flat growth and return to a moderate recovery path as the

pace of recovery in overseas economies picked up, led by emerging and

commodity-exporting economies, and as reconstruction-related demand after the earthquake

disaster gradually strengthened. Many members noted that production and public

investment had recently begun to show signs of a possible pick-up in the coming period.

One of these members said that one year had passed since the earthquake and economic

activity had almost returned to the pre-quake level. The member continued that this

marked an important phase for the economy, in which the momentum for self-sustained

recovery would be tested.

With regard to risks to the outlook for Japan's economy, members agreed that there

remained a high degree of uncertainty about the global economy, including the prospects for

the European debt problem, developments in international commodity prices, and the

likelihood of emerging and commodity-exporting economies simultaneously achieving

price stability and economic growth. As for the European debt problem, they shared the

view that, although it appeared less likely at present that tail risks akin to the Lehman shock

would materialize, it was nevertheless necessary to continue to pay attention to the

possibility of a sudden change in market participants' views on the European debt problem.

They then concurred that there was no major change in the landscape indicating that this

problem would continue to weigh on the global economy. Many members commented

that more time would be needed to overcome the more fundamental challenges,

strengthening the financial firewall, (2) enhancing fiscal governance, and (3) regaining

competitiveness of the economy. One of these members added that anxiety would sweep

through financial markets whenever some kind of problem materialized, and if the financial

firewall was inadequate and it took time to address this situation, it was highly likely that

instability in financial markets would reemerge. Many members pointed to various factors

behind the rise in crude oil prices, including the heightening of geopolitical risks associated

with the situation surrounding Iran, abating tensions regarding the European debt problem,

some improvement observed in the U.S. economy, and the implementation of monetary

easing around the world. On this basis, some members said that, if the rise in crude oil

prices were largely attributable to the heightening of geopolitical risks associated with the

situation surrounding Iran, not only could overseas economies decelerate, but also Japan's

economic activity could weaken as a result of declines in corporate profits and households'

purchasing power caused by a deterioration in the terms of trade, and thus it was necessary

to carefully monitor future developments. Some members noted that attention should

continue to be paid to uncertainty regarding electric power supply in Japan.

Members agreed that the year-on-year rate of change in the CPI (all items less

fresh food) was currently around 0 percent and likely to stay at this level for the time being.

One member expressed concern that the year-on-year rate of decline in the CPI (all items

less energy and food) remained relatively large. In response, a different member said that,

in the current 2010-base CPI, the weight of digital appliances -- for which the rate of

decline in prices was large -- had increased because the eco-point system had encouraged

the purchases of such appliances, and that it was necessary to take into account that this was

pushing down the year-on-year rate of change in the CPI. A few members -- referring to

the fact that there was an uptrend in the figure representing the difference between the

percentage share of items in the CPI for which prices had risen from the previous year and

those for which prices had declined, as well as in the trimmed mean CPI -- expressed the

view that prices were beginning to increase as a trend, albeit moderately. A few members

said that it was necessary to carefully monitor how the recent rise in crude oil prices would

be reflected in developments in the price indicators.

With regard to risks to the outlook for prices, members shared the recognition that

careful attention should be paid to future developments in international commodity prices

and in medium- to long-term inflation expectations.

Forexpros - Natural gas prices edged higher on Friday, as the previous day’s drop to the lowest level since September 2001 created bargain buying opportunities for investors, while other traders closed out bets on lower prices after futures moved into oversold territory.

On the New York Mercantile Exchange, natural gas futures for delivery in May settled at USD1.927 per million British thermal units by close of trade on Friday. On the week, prices tumbled 3%, the fifth consecutive weekly loss. Earlier in the day, prices fell to USD1.902 per million British thermal units, the lowest since September 26, 2001.  Prices have been hitting a string of fresh 10-year lows below the key USD2.00-level over the past two weeks, as market sentiment has been dominated by ongoing concerns over waning demand and elevated U.S. storage and production levels Despite Friday’s rare upward move, market participants expect the near-term downtrend in prices to continue, with some traders expecting prices to fall to USD1.850 in the short-term and eventually testing the all-time low of USD1.020 hit in 1992 in the long-term.Natural gas prices have plunged almost 26% since the beginning of March and are down nearly 36% since the start of 2012.Indications that demand for the fuel will remain weak in the near-term further weighed on market sentiment. In a three-month forecast for May through July, the National Oceanic and Atmospheric Administration said Thursday that above-normal temperatures are expected to stretch from the southwest across to much of the East Coast. The U.S. gas market is entering the so-called shoulder season. Gas use typically hits a seasonal low with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning. Further dampening sentiment on the fuel, researchers at Colorado State University said in a report last week that only four hurricanes are expected during this year’s storm season.

In total, the storm season that runs from June 1 to November 30 will produce 10 named systems, compared with 19 last year. Energy traders track tropical weather in the event it disrupts production in the Gulf of Mexico. Production in federal waters in the Gulf accounts for about 10% of natural-gas output, and prices typically spike when storms threaten production.Elsewhere in the energy complex, light sweet crude oil futures for June delivery traded at USD104.08 a barrel by close of trade on Friday, rising 1.19% on the week, while heating oil for May delivery dipped 0.56% over the week to settle at USD3.142 per gallon by close of trade Friday.

In the foreign exchange market, the yen depreciated

against the U.S. dollar as market participants focused on the turn in Japan's trade balance to

a deficit and the widening interest rate differential between Japan and the United States,

amid continued improvement in the U.S. economic indicators, as reasons to sell the yen.

The yen had recently been in the range of 82-83 yen to the dollar

NZDUSD Medium Term Trade

NZDUSD Holding Wkly  Support Pivot @ 0.81246
Next best price on dip I will be looking to go Long

Nzdusd Updated view


Release: NZ CPI q/q (1Q)
Consensus Forecast: 0.6%
Previous: -0.3%

Date/Time: 04/18/12 6:45PM EDT (22:45 GMT)

Will Inflation Data Act As a Catalyst for NZD?

The upcoming first quarter CPI inflation data is not expected to be a blow-out affair.

After declining 0.3% in the fourth quarter inflation is expected to rebound the modest 0.6%, a faster pace than in the 3Q, but below the pace seen the previous 4 quarters.

A rise of 0.6% on the quarter should actually see prices in annual terms fall to 1.6% from the 1.8% reading seen in the 4Q. That is well within the RBNZ inflation target between 1% and 3%, and is actually at the lower end of that target. It’s also far below the heightened inflation readings seen most of last year. Therefore, at the current moment inflation is not a big concern for the central bank and expectations around interest-rate increase from the RBNZ this year are muted (overnight index swaps are pricing in 14 basis points of increases over the next 12 months).

NZD/USD – Positive or Negative Surprise Could Give Kiwi Some Direction

In order to make it interesting, and to create some trading opportunity for NZD pairs I am looking to see if the there is a positive or negative surprise in CPI which could help be a catalyst for some moves for the Kiwi.
A reading that pushes prices above 2% annually for instance would be a positive surprise to the market and would warrant a reaction. If on the other hand we see prices coming in weaker than expected – a quarterly change below 0.5%, and an annual rate below 1.5% – that would likely undermine the fundamental case for the NZD.

The NZD/USD pair has been trading sideways for the last 6 and 1/2 weeks, thought it managed to push to a a 6-week high near 0.8315 last week where it was rejected at the 61.8% retracement of the downswing seen in late February-early March. To the downside, the pair has been capped at 0.8055 over that span, and has not fallen below 0.8120 during the last three weeks. Again, very ranging conditions.
A negative surprise, one in which inflation is even more muted than the status quo expectation could give the pair a reason to head down towards its lows from the previous 3 weeks near 0.8120 at which point we’ll see if there is enough momentum to break that level and target 0.8055.
Earlier in the week, food prices showed a 1.0% decline for the 1Q, which points to a negative surprise as the more probable outcome.
A positive surprise on the other hand, one showing inflation pressure picking up, could see the pair begin an ascent towards the 0.8230 area, our highs from earlier this week.
Now, the NZD/USD is beholden to general risk sentiment, and sentiment was generally weak today, but an important fundamental release like the quarterly CPI data could just be the catalyst needed to spark a move one way or another. Still, with the sideways action of late, we shouldn’t expect a an out-sized move one way or the other.

fxtimes news

Aud-Usd: Week Ending 4-13-2012

Aud-Usd: Week Ending 4-13-2012

hrly chart hit L_MLH @ 1.03370 and crossed the fib50% retreacement @ 1.03513
so i went long

RBA Minutes 17/04/2012

Equity prices in the United States rose by a further 3 per cent over the month, with the S&P 500 recording one of its strongest quarterly rises, but the Australian equity market had not experienced similar increases in recent times. In part, this reflected concerns about a slowdown in China (with Chinese equity prices falling by 6 per cent over the month), but it also reflected the composition of the local market, with the (recently underperforming) mining and financial sectors having a significantly greater weight in the local index, and technology stocks a much smaller weight, than in the S&P 500.

The Australian dollar had depreciated over the past month, but still remained at a high level. The recent depreciation, in part, reflected increased concerns among market participants about the effects of the moderation in Chinese growth on the Australian economy. Data released during the month confirmed that offshore purchases of Australian government debt were sizeable in the December quarter. Foreign holdings currently accounted for three-quarters of Commonwealth Government securities on issue and about one-third of state government debt.

Members noted that market pricing currently suggested just under an even chance of a reduction in the cash rate at the current meeting, with at least two reductions expected over the remainder of the year.

RBA Minutes 

Domestic Economic Conditions

Members noted that the national accounts for the December quarter had shown an increase in real GDP of 0.4 per cent in the quarter and 2.3 per cent over the year, which were both lower than expected. Private domestic demand had grown strongly over the year, led by growth in mining investment. However, growth in exports over 2011 had been weaker than expected, mainly because of lower coal exports, which, in turn, reflected a slower recovery from the floods in Queensland in early 2011, together with a slower take-up of new rail and port facilities in NSW and Queensland. Service exports had also been weak, reflecting a decline in the number of visas for foreign students as well as the effects of the higher exchange rate and lower external demand.

The national accounts showed that household consumption spending on both goods and services increased by around 3½ per cent over the year to December. This was a little higher than the rise in disposable income over the same period, and it was also stronger than suggested by other partial indicators, including the Bank's retail liaison. More recent indicators show that consumer sentiment fell in March to be a little below its average level, with household concerns regarding future unemployment at their highest level since mid 2009.

Members spent some time exploring reasons for the weakness in many of the indicators for housing turnover and building activity across Australia. They noted the apparent sensitivity of developers to the outlook for dwelling prices. New dwelling construction had fallen in the December quarter and there was little sign of a pick-up in building or loan approvals, though house prices had shown some signs of stabilising recently. While auction clearance rates in Sydney and Melbourne had picked up a bit of late, they remained below their average levels.

Indicators of business activity had been mixed. While business surveys suggested that overall conditions remained at average levels, there were significant differences across sectors and business confidence remained somewhat below average. Mining investment had increased by around 60 per cent over 2011 and, with a large number of projects already at a commitment stage, resource investment and export volumes appeared likely to increase further in coming years. In contrast, the level of non-mining investment had been flat over 2011, and recent surveys of business intentions suggested that non-mining investment was likely to remain sluggish for some time. Business credit growth had increased slightly over recent months, but remained low.

Exports had grown modestly in recent months, in part reflecting disruptions to the supply of bulk commodities. While preliminary data for February suggested that coal exports from Queensland had now returned to their pre-flood levels, production was still being affected by industrial action in Queensland and a shortage of explosives in NSW. In addition, export volumes of iron ore in the March quarter had been affected by cyclone activity, while service exports had been affected by the sharp fall in the number of international students in Australia over the past year or so, with no indications that this would be reversed in the near term. In contrast, the outlook for rural exports remained strong following a large winter crop and good rains across the eastern states.

Labour market conditions remained subdued, with employment falling by 15,000 in February and showing little change for much of the preceding year; increases in employment in mining, health and public administration had broadly offset declines in employment in manufacturing, retail trade and accommodation & food services. Despite this, the unemployment rate had remained at around 5¼ per cent for more than six months. Members noted, however, that an easing in average hours worked and a decline in the participation rate were indicative of a softer labour market than that implied by the unemployment rate.

There had been little new information on wages and prices this month. Recent business surveys and liaison indicated that firms expected wages to continue to grow at around, or a little slower than, their recent pace.