Macroeconomic data from the United Kingdom and Canada were far from market expectations - 23.1.2014

Canadian Dollar (USDCAD) continued its weakening (on the chart, it looks like a powerful growth) after the surprise announcement from the Bank of Canada. From the beginning, the the growth on the chart was almost 5%. Yesterday, the Bank of Canada held the discount rate unchanged. It remained at 1% since September 2010. The Bank of Canada quarterly economic report had the inflation forecast downgraded. It was also noted that, despite the impairment, the Canadian dollar is still a strong currency. This can cause problems with non-commodity exports of Canada. Forex market participants concluded that the authorities are not going to take measures to support the currency. Recall that the Bank of Canada has set the annual inflation target range at 1% to 3%. If it comes out of it then the issue of changing the discount rate is open. The Canadian inflation data for December will be announced on Friday. It is projected that it will remain within acceptable limits and will be at 1.3 % on an annualized basis. Today at 13-30 GMT (0), there are the retail sales data for November expected. The preliminary forecasts, in our opinion, are positive. In this regard, the Canadian dollar may drop slightly on the chart.

The macroeconomic data from the UK was also pretty far from the expectations of market participants. The unemployment in November fell to its lowest level in the last five years (7.1 %), which is much better than the preliminary forecasts. Because of this, the likelihood of rate hike in the UK was increased. As a result, the British pound (GBPUSD) strengthened yesterday (growth on the chart) and reached the highest level in three weeks. However, we believe that it will be traded inactively today. Forex market participants expect tomorrow's data on mortgage loans and the British auction of government bonds amounted at 3.25 billion pounds.

The Australian Dollar (AUDUSD) fell after the weak industrial production data for China, which is the main buyer of Australian raw materials. On the basis of overnight swap quotations, the likelihood of the discount rate in Australia remaining at the current level (2.5%) until June rose to 78% from 54% last week. However, the change in the monetary policy could be sooner. The fact is that due to low mortgage rates in Australia, at 5.95 %, there may be a "bubble" formed in the market. The number of mortgage loans according to November data increased by 25 % compared with a year earlier. The average urban housing price has increased by 9.8% to A$615K. According to the IMF, Australian property is in the fifth place in overvalue after Canada, New Zealand, Norway and Belgium. Recall that the important economic data will be released in Australia until the end of next week (Thursday and Friday).

According to the DTN, American farmers' organization, the cold weather in the U.S. could damage wheat crop (WHEAT). This message is supported futures on wheat and corn (CORN). According to the U.S. meteorologists, the temperature in the Midwest next week will be 15 degrees Celsius below the normal level.

There is lot of the EU and the U.S. macroeconomic information comes out today. You can read more about this on our web site Analytics" - "Economic Calendar". In our opinion, the preliminary forecasts are more in favor of the U.S. dollar than the euro. However, the PMI for the EZ comes out at 9-00 GMT (0). It is expected to be positive. This can cause a strengthening (increase) of the Euro (EURUSD) in the first half of the day.