Central Bank Rate: <0.25%
SNB has continued to enforce the 1.20 floor they put on the EURCHF pair.
CHF is usually a safe haven investment and trades tend to buy it as a reserve since it tends to be strong during volatile times. SNB is actively discourage investors from buying and have spent billions to keep the price of the currency lower.
The SNB is trying to main sell the CHF against strong yield currency pairs in order to help keep the price now.
Key Indicators To Watch:
Exchange rate of EURCHF(1.200 bottom)
Last Weeks Fundamental Releases
Trade Balance - Actual: 1.39B Forecast: 2.56B Previous: 3.90B
Although the trade balance is still positive(bullish) it is significantly decreasing which is giving power to the sellers and could be signalling a change in trade balance.
Decreased back near yearly lows set in Jul at 1.38B
PPI - Actual -0.2% Forecast: 0.2% Previous: 0.0%
Producer inflation is decreasing and has been low/decreasing all year
Signaling weak inflation/deflation.
Libor Rate - Actual: <0.25% Forecast: <0.25% Previous: <0.25%
SNB Monetary policy Assessment
Maintaining 1.20 Bottom on EURCHF.
Expect inflation to be contained for rest of the year and expect slight increase in the beginning of 2015 and then it is expected to slump from mid 2015 to 2016.
Overall SNB said they expect to see the CHF weaken over the forecasted period(Now - 2016)
Weekly Fundamental Summary
With the SNB enforcing EURCHF 1.200 floor and their overall outlook being bearish, combined with the decreasing inflation and trade balance it is very obvious that this currency is a sell, especially against stronger currencies.
Since the CHF is a safe haven currency the SNB rarely ever change rates so it is likely they will be continue to try and keep the CHF down for the foreseeable future. the EURCHF literally can not go any lower than 1.20 so anything near this low is a good time to buy. Only thing really keeping the EURCHF from taking off in my opinion is the strength of EU. With the fundamentals getting worse and SNB continueing to be bearish this currency is definitely a sell.
Central Bank Rate: 1.00%
BOC has previously been dovish but lately they have began sounding more neutral.
Inflation data has been improving which has caused a sell off in the USDCAD from its fair price down to yearly lows but it has since returned back to its fair price.
BOC dismissed improvement in recent statements and claimed that figures will start to become more bearish from here prompting weakness in the CAD.
Markets will now watch employment figures closely as BOC mentioned these were big part in keep economy down. we need to see these improve before CAD will.
Key Indicators To Watch
CPI Inflation(Target 1-3%)
Last Week Fundamental Releases
Manufacturing Sales m/m - Actual: 2.5% Forecast: 1.1% Previous: 0.9%
Manufacturing Sales have continued to increase basically every month this year and just printed out its largest gain this month
This is strengthening the currency by quite a bit.
BOC Gov Poloz Speaks
Reiterates they are aiming to keep inflation at 2%, mid point of their 1-3% target.
They want to keep inflation low(basically currency down) but BOC says they will not try to do anything to step in as this could cause the market more harm than good.
Overall he saying to focus on the Data to understand where the cad is going.
Core CPI m/m - Actual: 0.5% Forecast: 0.2% Previous: -0.1%
Core CPI crushed forecast and previous months numbers showing inflation(which is good for currency)
Core CPI has continued to increase almost every month this year so this huge increase should greatly strengthen CAD
Wholesale Sales m/m - Actual: -0.3% Forecast: 0.8% Previous 0.8%
Overall wholesale sales have increased every month this year except for 3(including this month). This shows that the trend is up/growing.
This miss being the 3rd time it has decreased this year I am not too worried and look at it as a breather or a slight dip in the overall bullish trend.
CPI m/m - Actual: 0.0% Forecast: -0.1% Previous: -0.2%
CPI numbers were better than expected this month. That being said the CPI did not increase.
CPI has increased every month except for 2 this year so the overall trend is up.
Even though CPI did not increase this month it is still very bullish as it appears to just be taking a breather.
Weekly Fundamental Summary
All of the fundamental data coming from CAD this week was bullish and I expect it to be bullish. BOC is being more neutral than anything saying they want to maintain a low inflation rate of the CAD but will not necessarily step in to do so and instead will let the Data run its course. That being said as long as CAD data continues to be strong I expect it to continue to be strong as well.
Overall the data coming from the country is mixed since the inflation numbers are good but BOC is focusing on employment numbers being bad. With the BOC saying they won't necessarily step in to keep the CAD lower it will likely increase as long as the data continues to be good.