Forex Flash: Dollar bloc continues to under perform – BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that the dollar bloc continues to be a key under performer across the markets of late.
They feel that AUD has again turned back from the 1.0580-0600 area and is flirting with the lows of the week, just below 1.0500. They see that a strong Chinese PMI was insufficient to avoid what appear to be stale longs exiting on rallies, and write, "HSBC's measure of China manufacturing PMI rose to a 2-year high of 51.9 from 51.5 in December. Gains were widespread, including output, orders, and employment, which account for about three-quarters of the index. Exports also edged back above the 50 boom/bust line."
Elsewhere, the team note that USDCAD is trading near parity for the first time in two months following soft Canadian data and more importantly, a more dovish than expected BoC statement yesterday. They feel that essentially the bank pushed out from the end of this year to the second half of 2014 as to when it believes conditions warrant higher interest rates. They finish by writing, "It will take longer than BOC previously thought for the economy to reach full capacity and for inflation to be back near target. The Bank also acknowledged what it sees as the start of "constructive evolution" of the household sector. The CAD1.0040-60 represents the immediate target."
They feel that AUD has again turned back from the 1.0580-0600 area and is flirting with the lows of the week, just below 1.0500. They see that a strong Chinese PMI was insufficient to avoid what appear to be stale longs exiting on rallies, and write, "HSBC's measure of China manufacturing PMI rose to a 2-year high of 51.9 from 51.5 in December. Gains were widespread, including output, orders, and employment, which account for about three-quarters of the index. Exports also edged back above the 50 boom/bust line."
Elsewhere, the team note that USDCAD is trading near parity for the first time in two months following soft Canadian data and more importantly, a more dovish than expected BoC statement yesterday. They feel that essentially the bank pushed out from the end of this year to the second half of 2014 as to when it believes conditions warrant higher interest rates. They finish by writing, "It will take longer than BOC previously thought for the economy to reach full capacity and for inflation to be back near target. The Bank also acknowledged what it sees as the start of "constructive evolution" of the household sector. The CAD1.0040-60 represents the immediate target."
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