February 12, 2010
Despite the fresh wave of risk aversion, the Loonie was able to paddle to victory yesterday. Greece’s debt woes, the usual proponent of risk aversion lately, could be far from over now that EU officials have decided not to dole out direct aid to the ailing nation.
The rise in Canada’s new home prices was probably the reason why the Loonie was able to keep its head above water. New home prices rose for the sixth straight month in December, climbing by 0.4% on the heels of improving market conditions. Although house prices were still down by 0.9% from a year ago, concerns about a possible house price bubble started to form. However, plenty were reassured by Finance Minister Jim Flaherty’s statement saying that there was no evidence of home-buyers taking on unsustainable debt.
Today, we turn our attention to the automobile industry as Canada releases the new motor vehicle sales report for December. After sliding down by 6.0% in November, new automobile sales are expected to rebound by 2.0% in December. Even though this report is slated to have a minimal impact on the loonie’s price action, a stronger than expected figure could provide support for the currency.
Still, keep an eye out for the US retail sales report also due today. Would we see another disappointment this time? Could an upbeat report fuel risk appetite or would it spur more US dollar buying? Better stay tuned during the release of the actual figure at 1:30 pm GMT.
"The only cable I watch is the pound baby."