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Bank Of Canada Decision On Tap Today
The market still seems to be scratching about for ideas as yesterday saw continued unwinding of Friday's moves to risk willingness. It seems that the best way to trade this market is to wait for it to get excited about something and then fade the move as themes don't seem capable of following through and becoming real trends. Liquidity is very poor at the moment.

The Bank of England announced the specifics of the lending facility designed to ease credit conditions in the mortgage market after the recent record low RICS house price balance data. The market clearly found the measures insufficient for now and GBP performed a whiplash reversal that wiped out much of its recent gains. Some believe that the GBP 50 billion amount of the facility is insufficient to ease the pain while others pointed out that the facility will only reduce credit spread if all of the banks rush in to use it. In other words - the market isn't sure of the impact and the choppy GBP charts certainly reflect that. Still, the damage is at least partially done on the EURGBP uptrend and the pair may continue to chop around in a wide range.

The Bank of Canada is out today with a key interest rate decision. A slim majority in the market are looking for a 50 bp cut to bring the rate to 3.00%. With the market undecided on what Carney and company at the BOC will do, we would expect that today's decision. One problem remains conflicting pressures on CAD. Recent risk willingness and record oil prices have been a boost to the loonie, while the interest rate differentials of late suggest strong pressure for a weaker CAD vs. the USD. The pair has twice grazed close to the parity mark recently but may have a hard time falling through if the 50 bp cut materializes today. To the upside, there's an awful lot of resistance we need to chop through before we can start to discuss a new uptrend, but the bigger perspective still suggests more upside than downside potential for this pair - especially above the 1.0380 level. The BoC would definitely like a weaker CAD, so a 50 bp cut is the only way to go for that eventuality.

We'll watch the US Existing Home Sales data and weekly consumer Confidence data today with interest . We wonder if the existing home sales reading might be even worse than expected considering the tightness of credit in March, though it will take a truly horrific number to surprise the market considering the already steep downtrend for this indicator. With a strong acceleration in gasoline prices over the last week and likely general pessimism at the increasingly mudslinging democratic primary struggle, another new near 15-year low for the weekly ABC consumer confidence reading may be in the wings.