Summary
The equity markets climbed slightly as investors recovered from Friday’s drubbing. Volume was extremely light and the S&P 500 index oscillated between minus two and plus 8. For the trading session the S&P 500 Index closed higher by 6 points to 1073. After the close, IBM’s poor earnings release, hit the futures, which is likely to spill over into tomorrow’s trading.
Tomorrow's Events
AUD
1:30
RBA Meeting Minutes
EUR
6:00
German Producer Prices
June
.2%
.3%
CHF
7:15
Swiss Trade Balance
.82B
USD
12:30
US Housing Starts
.58M
.59M
US Building Permits
.57M
CAD
13:00
BOC Interest Rate Decision
.75%
.5%
Trading Opportunities
USD/CAD
The Canadian dollar is weakening as part of an overall risk aversion trade relative to the US dollar. On Tuesday, the Bank of Canada is expected to increase interest rate to .75% from .50%, as the Canadian economy continues to show signs of strong growth. A surprise move, in which the BOC raises rates by 50 basis points, would push the USD/CAD down to the 1.03 level. If the USD/CAD moves up to the 1.0650 resistance level, it is worth a short.
USD/JPY
The USD/JPY had a difficult time moving higher along with equity markets. Risk aversion to the US dollar has been a theme for the past 3 weeks given the disappointing economic news release by US government agencies. The housing market has been very week, especially in reports released for May and June, and tomorrow US Housing Starts and Building Permits will give investors information on future movements in the housing market. A break below the 85 level, will lead to liquidation in the currency pair.