Fundamental News: July 18, 2013

 

Statistics Canada reported yesterday that Foreign Securities Purchases eased to CAD6.74 billion in May, falling short of the CAD10.23 billion median forecast. Canada’s international transactions diminished for all types of securities, particularly bonds. May’s decline was more than half of April’s CAD14.91 billion advance.

 

Bank of Canada decided yesterday to hold rates steady at 1 percent. The central bank expects global economic growth to remain modest, while the local economy is “expected to be choppy in the near term.”

 

Building Permits issued in the United States grew at an annualized pace of 0.91 million, weaker than the 0.99 million estimate, according to the Census Bureau. US Housing Starts also failed to meet its median expectation, declining to an annualized rate of 0.84 million houses, the lowest level since August 2012’s 0.76 million reading.

 

During Bernanke’s much-awaited testimony in Washington DC, he said that the Fed’s intention is to “keep the monetary policy very accommodative for the foreseeable future.” He further explained that the economy would tank if the fed tightens. All in all, he was fairly dovish.

 

Meanwhile, the Fed’s Beige Book said the overall economic activity persisted to advance at a “modest to moderate pace” since the prior survey, with many districts reported gains in manufacturing, consumer spending, as well as auto sales.

 

Today, Australia’s CB Leading Index registered a flat reading in May, down from April’s 0.3 percent. On the other hand, National Australia Bank’s Quarterly Business Confidence came in -1 for the June quarter, down from 2 during the prior quarter.

 

Euro-area Balance of Payments stood at a seasonally-adjusted EUR19.6 billion in May, lower than the current median forecast as well as April’s upwardly-revised EUR23.8 billion surplus.

 

UK Retail Sales rose only 0.2 percent in June. This was a decline from May’s 2.1 percent advance, according to the Office for National Statistics.

 

Later, the market will remain on their toes and look at Canada’s Wholesale Sales, US Unemployment Claims, Philly Fed Manufacturing Index, and Federal Reserve Chairman Bernanke’s Senate testimony.

 

Commodities News

 

For a change, Gold touched the $1,300 level but eventually drop due to volatility during Bernanke’s testimony. The drop ceased at $1,270 and this level has held until today. Further volatility is expected later, as Bernanke testifies for the second day.

 

 

Oil diverged from gold and moved higher yesterday, closing near the top. Price still trades in the $106s despite a brief visit below this level. Traders are advised to step aside for now, until better prices are reached.

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