BoE minutes showed a 6-3 vote in favour of the interest rate hike in July, less hawkish than market expected. Markets still predict a hike to 6.00% by the end of the year, but there is less certainty now of another quarter point hike in 2008.
Canadian CPI declined by 0.2% in Jun from May, and came in at 2.2% y/y, below expectations for a 2.5% reading. Core CPI came in at 2.5% y/y, slightly below expectations of 2.6%.
US June CPI was broadly in-line with expectations. CPI increased 0.2% from May, and grew 2.7% y/y (exp 2.6%). Core CPI grew 2.2%, inline with market expectations.
US housing starts rose 2.3% in June to a 1467K unit annual rate, above the 1450K forecast. However, building permits fell 7.5% to hit a 10yr low of 1402K (exp 1490K).
Fed chief Bernanke told congress that US economy would grow slower than expected and inflation remained the chief concern. He also said that subprime issues would weigh on the economy for several quarters and would probably get worse before they get better.
USD/CAD is trading at 1.0448. Buy CAD at 1.0500, target for 1.0300, and place stop above 1.0610.
DOMAINS YAHOO FOR CONFERENCE CALL SERVICE
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