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Bank of Canada may Stay Put at Its April Meeting



The Bank of Canada releases its policy decision at 10:00 ET on Wednesday, alongside its quarterly monetary policy report. "We think the overnight lending rate will be kept at 0.75%, as all analysts polled by Bloomberg also forecast. We do not entirely dismiss a rate cut - the memory of the 'surprise' January rate cut remains vivid", Says Standard Chartered Governor Poloz is not afraid of surprise moves - but the probability is relatively low. The tone as being dovish, and expect Governor Poloz to emphasise that the BoC remains open to cutting rates further later, depending on the data. A likely modest cut to the 2015 growth forecast (currently 2.1%) should add to the dovish slant.

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Poland Will Probably Exit Deflation This Year



Although a stronger PLN may extend the period of deflation, a turning point has been reached in the deflationary cycle that began in August 2014. The CPI bottomed out in February, and after increasing in March, and it will likely gradually increase in the forthcoming months, turning positive again by the end of Q4 15. The central bank expects deflation to come in at -0.5% yoy at the end of 2015. The Ministry of Finance expects the country to exit deflation sooner than the central bank is forecasting. It is possible, however, that a stronger PLN and volatile oil prices create uncertainty around the ministry's expectation. "In its recent World Economic Outlook, the International Monetary Fund forecast Poland's CPI to accelerate to 0.4% yoy at the end of this year. In our opinion, it will instead be in the range of 0.1-0.3%", said Societe Generale in a report on Thursday

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Canada: Cpi and Retail Sales Two Top Tier Data Releases Tonight


Tonight we get two top tier data releases in Canada: CPI and retail sales. A still-firm, but on-consensus CPI report is expected (RBC: core 2.1%y/y, cons: 2.1%), and considering the BoC seems to be more focused on activity indicators at the moment, that means the retail sales figure is more relevant and likely to get an FX reaction. The expectations are decently above consensus for retail sales (RBC: ex-auto 1.3%m/m, cons: 0.7%). That implies a CAD positive reaction, but that may only be a small influence compared to the direction of oil prices which have been the most important driver for CAD this week. RBC Capital Market Says "Our technical strategy team highlights 60.99 and 63.50 as the key levels above for WTI now that the long-held range has broken. For USD/CAD, they point out 1.2114 and 1.2066 as the key levels below, and see resistance located at 1.2253 and 1.2326"

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Treasuries Recover From Early Weakness Amid Sell-Off On Wall Street



After moving modestly lower in early trading Friday, treasuries showed a notable turnaround over the course of the trading day. Bond prices climbed well off their early lows to end the day firmly in positive territory. Subsequently, the yield on the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.8 basis points to 1.85 percent. With the drop on the day, the ten-year yield extended a recent downward trend, ending the session at its lowest closing level in well over two months. The rebound by treasuries was partly due to a sell-off on Wall Street, with the Dow tumbling by more than 300 points at its worst levels. Concerns about developments overseas contributed to the pullback by stocks, leading some traders to move their money into the relatively safe haven of bonds. The early weakness among treasuries came following the release of the Labor Department's report on consumer price inflation in the month of March. The Labor Department said its consumer price index edged up by 0.2 percent in March, matching the increase seen in February. Economists had expected the index to rise by 0.3 percent. Core consumer prices, which exclude food and energy prices, rose by 0.2 percent for the third consecutive month. The uptick in core prices matched economist estimates. While the headline index was down by 0.1 percent compared to a year-ago, the annual rate of core price growth ticked up to 1.8 percent in March from 1.7 percent in February. The core price growth is more closely watched by the Federal Reserve. Rob Carnell, chief international economist at ING, said, "Given recent activity data weakness, which has seemed to all but rule out a June rate hike, this data adds an additional, but unhelpfully contradictory inflation element to the rate hike timing debate." "That said, it will need corroboration by activity data soon if it is not to be too late for a June hike, and that point of no return may have already been passed," he added. Following the slew of economic data released over the past week, the economic calendar for next week is relatively quiet. Nonetheless, traders are likely to keep an eye on reports on weekly jobless claims, durable goods orders, and new and existing home sales.

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Japan Tertiary Industry Index +0.3% In February



An index measuring tertiary industry activity in Japan was up a seasonally adjusted 0.3 percent on month in February, the Ministry of Economy, Trade and Industry said on Monday, standing at 100.5. That topped forecasts for a decline of 0.7 percent following the 1.4 percent gain in January. Among the industries moving higher were real estate, transport and postal activities, finance and learning support. Industries moving lower included retail, medical, utilities, personal services and compound services.

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Singapore Inflation Likely decreased Further in March



Singapore releases March inflation numbers on 23 April. On a seasonally adjusted m/m basis, inflation likely decreased to -0.1%. Singapore's current path of disinflation is temporary. Housing inflation likely continued to drag down headline inflation, as decreases in housing prices weighed on the rental market. Private road transport inflation was also likely dragged down by a sharper correction in ownership premiums on motor vehicles. In contrast, petrol duties implemented in February likely continued to support core inflation. A deflationary pressures is seen dissipating as the year progresses. "We expect inflation to have declined further to -0.5% y/y, versus the higher -0.3% recorded in February", says Standard Chartered.

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Taiwan Ip Data Likely to have slowed due to Base Effects



Taiwan is scheduled to release March industrial production (IP) data on 23 April. Weak export sales data during February-March and softer global oil prices likely impacted production output negatively in March. Residential and real estate construction activity is expected to have been dampened by the government's efforts to curb speculation in the residential property market. On the positive side, activity in the local retail trade and services sector likely remained robust, partly due to rising tourist arrivals, which supported IP activity. "We expect IP to have expanded by 2.0% y/y, the slowest annual gain since late 2013, partly due to base effects", says Standard Chartered.

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Germany Ifo Business Climate Likely continued to Improve



The index has been on a clear uptrend since its trough in October 2014. The combination of a lower oil price, and European Central Bank easing policies that led to euro (EUR) depreciation and lower borrowing rates is helping German businesses. Exporters are likely to be particularly positively affected by EUR depreciation. In the last survey, manufacturers, wholesalers and retailers all showed an improved outlook. The construction-sector outlook deteriorated, but remains strong. Germany is expected to maintain this positive momentum in Q2, unless geopolitical events raise uncertainty or the situation in Greece becomes more dramatic. "We expect the German IFO business climate index to have increased to 108.7 in April from 107.9 in March, an eight-month high", said Standard Chartered in a report on Thursday.

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Japan Producer Prices Rise 3.2% In March



An index measuring producer prices in Japan were up 3.2 percent on year in March, the Bank of Japan said on Friday - standing at 103.0. That was just shy of forecasts for 3.3 percent, which would have been unchanged from the February reading. Among the individual components, prices were down for hotels, real estate, communications and transportation. For the first quarter of 2015, producer prices were up 3.3 percent on year, slowing from 3.5 percent in the previous three months. They were also down 0.1 percent on quarter after adding 0.2 percent in the three months prior.

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Americas Roundup: Cad Rapidly Depreciating Vs. Usd on Friday, Poloz Speech Weighs - 27 April, 2015

Market Roundup United States Durable Goods Mar 4%, forecast 0.6%, previous -1.4% United States Non-def Ex-Air Mar -0.5%, forecast 0.3%, previous -2.2%, def spending skews headline number Mexico Retail Sales YY Feb 5.6%, forecast 4.2%, previous 4.7%, rates on hold unless inflation rises United States Mar building permits revised number mm increase to 1.042 mln vs previous 1.039 mln United States Mar building permits revised chg mm increase to -5.4 % vs previous -5.7 % Argentina Feb economic activity yy increase to +1.4 % (forecast 0.5 %) vs previous 0.0 % Argentina Mar industrial output nsa increase to -1.6 % (forecast -1.5 %) vs previous -2.2 % Colombia's central bank holds key lending rate at 4.5 pct, as expected Greece's Varoufakis agreement with lenders will be difficult but will happen, there is no other choice; Greece needs a deal & is ready to compromise Germany'S Merkel says we will do everything to ensure that Greece stays in the Euro zone European governments have largely failed to reform (EU document) Bank of Canada's Poloz Oil price shock soon to be positive overall for Canada Reuters Poll Brazil's CB to hike rates 50bps next week to 13.25% (42/48 economists) Economic Data Ahead No Significant Data Key Events Ahead Sat Apr 25 (1130 ET/ 1530 GMT) German Bundesbank Pres Weidmann & German FinMin Schaeuble to participate in a press conference FX Recap USD/CAD: Canadian dollar is now rapidly depreciating vs. its American counterpart on Friday, lifting USD/CAD to session highs near 1.2180. Canadian dollar shed further ground following Poloz speech. USD dynamics and the crude oil performance will remain the main drivers for the CAD into the next week. GDP figures for the month of February, due on Thursday will also be watched. Currently the pair is up 0.21% at 1.2170. Immediate resistance is at 1.2208 (low Apr 22) followed by 1.2250 (high Apr 23) and then 1.2328 (high Apr 16). Supports on the downside are at 1.2135 (low Apr 23), 1.2100 (psychological level) and finally 1.2088 (low Apr 17). Option expiries Monday 27th: 1.20 (700M),1.2035-50 (700M), 1.2165 (804M), 1.22 (807M) USD/JPY: Greenback is losing face in to the closing hours of the week's session. USD/JPY bears in charge ahead of BoJ next week. The pair has lost the 119 handle in a bearish market, and is currently trading at the day's low of 118.84 after having made a high of 119.67. Supports is seen at 118.30 (March 26 low), while resistances are at 120.14 and 120.44. Option expiries Monday 27th: 119.00 (738M), 120.00 (1.8BLN) EUR/USD: Renewed optimism regarding a potential EU-Greece deal pre-Eurogroup meeting gave extra legs to the pair. Markets shrugged off poor results from the preliminary manufacturing and services PMIs as well as mixed IFO numbers. Lack of progress in the Eurogroup meeting prevented EUR-bulls to advance beyond the key barrier at 1.0900. Euro is above 1.0800 vs USD, on track to close the second consecutive week with gains. Another test of the 1.0900 handle and the critical resistance band at 1.1040/60 in the pipeline in the upcoming sessions. Option expiries Monday 27th: 1.0800 (521M), 1.0900 (1.1BLN) EUR/GBP is consolidating lower after the cross was punished from above the 0.72 handle. EUR/GBP rally ran in to strong offers just shy of the 0.7200 round figure at the cloud base at 0.7194. The pair is currently trading at 0.7160 with a high of 0.7212 and low of 0.7147. 0.7015 (March low) and 0.7000 (psychological level) are key supports.

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