Today’s upward revision of GDP and new home sales beating expectations helped buoy the dollar today. As I had anticipated it faltered against its Canadian counterpart despite a weak current account figure. These figures seem impressive but when you consider the low Q2 figure the GDP isn’t so great and also remembering that they are practically giving away new homes to get them sold the reality becomes clear. New house prices are down 13% year on year and the inventory is still bloated. Looking ahead tomorrow’s calendar is chock full of economic data releases with very important inflation and sales figures from Europe, as well as GDP data there and in Canada also. Not to mention British consumer confidence. On top of all this we have the Personal Consumption Expenditures and income coming out which the Fed is known to watch closely coming from the US a little later at the same tie Canadian GDP is coming out! Top it all off with Chicago PMI and construction spending (which will remain weak) and you should end up with an action packed session. Expect any increase over the forecast GDP in Canada to lift the Loony. Look for significant movement in the European session anything over .7% for the Swiss and the Euro area GDP is a big reason to buy also, this could be muted by weak retail spending though. The best advice is usually to let a release of data become digested by the market before jumping in, if you are doing this tomorrow you had better book a profit quickly before the next round of numbers come out. Don’t expect Core PCE to be very high since high gas and food prices have probably curtailed consumer spending. Expect an overall dollar negative day.
