Why EUR-CAD down april 17, 2012

forex trading outlook today - Why EUR-CAD down april 17, 2012 : The single currency plunged 1.04% against the loonie in the early hours of the European trading session, accumulating a loss of more than 3 cents since the begining of April. The cross dropped while the BoC decided to leave its rate at 1%. Earlier today new figures for manufacturing shipments in Canada revealed a MoM 0.3% drop, less than expected, while new motor vehicles posted a MoM 6.7% contraction, much worse than expected.

The EMU's CPI and core CPI beat expectations and registered 1.3 and 1.6% YoY increases, respectively. The German ZEW economic sentiment and confidence surveys overperformed forecasts in April with scores of 23.4 and 40.7, respectively. The survey for the EMU also beat expectations, reaching 13.1 against a previous 11.0.

The cross is currently at 1.2995 and faces resistance at 1.3185, before 1.3237 and 1.3326 according to Fxstreet.com pivot points on technical tools. On the downside, there is support at 1.2925 and 1.2958.

Westpac analysts are pointing out to the hawkish statement of the BoC that might trigger a fall of the EUR/CAD. “EUR/CAD is barely lower so far this year, and we continue to have our doubts about the Eurozone”, wrote analyst Richard Franulovich, aware of pressure over Spain (10-year bond sale on Thursday) and doubts about the LTRO’s success, while the IMF is far from stepping up with enough funds to help build a large firewall.

“Even after today's statement signalling that, "some modest withdrawal of the present considerable monetary policy stimulus may become appropriate", we estimate that only a mere 15-20bp or so of tightening from the BoC is priced into markets by December 2012”, adds Franulovich, pointing to 1.2450 (June 2010) as target of Westpac’s short order, while 1.3200 is the stop loss.

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