After Mark Carney’s acknowledgment that the financial markets have improved, whilst warning that downside risks remain to the global economy, the Canadian dollar registers gains opposite the Australian currency. Further gains by the Loonie are projected today as price activity has breached the 1.0465 support in the technical chart.
Risk demand in the American markets is also seen to benefit the Loonie currency, with the Advance GDP report from the US Bureau of Economic Analysis. US labor market data is also scheduled for release today. Further, the Federal Reserve will announce the outcome of its two-day Federal Open Market Committee meeting, speculated to push risk confidence higher.
Gross domestic product in Canada’s neighbor jumped to an upwardly revised 3.1 percent final figure in Q3. Though the markets are expecting a downturn for the Q4 release, the first estimate of fourth quarter growth is forecast at a 1.2 percent annualized rate. Should the GDP data come out as better than expected, risk sentiment is perceived to hike and buoy demand for the Loonie.
Economists polled by Thomson Reuters forecast 165,000 private sector jobs were created in January. Though this is lower than December's 215,000 number, the ADP data will be of interest ahead of the Labor Department's monthly jobs report at the close of the week.
Further, the median estimates in a Bloomberg survey of economists point out that Fed Chairman Ben S. Bernanke’s latest round of bond buying will reach $1.14 Trillion before he ends the program in the first quarter of 2014. Bernanke will push on with purchases of $40 Billion a month of mortgage bonds and $45 Billion a month of Treasuries, according to the survey.
Meanwhile, Bloomberg reported that floodwaters in eastern Australia due to ex-tropical cyclone Oswald forced thousands of people to flee their homes and caused millions of dollars of damage. The Insurance Council of Australia declared a catastrophe for parts of Queensland and New South Wales, which together account for about half the nation’s economy. The severe weather left six people dead, disrupted mining operations in Queensland and caused an estimated A$187 million ($196 million) in insurance losses. While the damage is less than floods and storms two years ago, Treasurer Wayne Swan has acknowledged that costs would have an impact on the federal budget.
Considering these fundamental data, a sell bias is recommended for the AUDCAD today. It would be wise to keep watch for probable technical price corrections though.
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