• Home sales take another hit
  • BoC boosts CAD
  • Draghi keeps euro steady
  • China’s outlook downgraded

Existing home sales in the US disappointed this morning, hitting more than double the negative print the market was expecting. This comes after weaker than expected new home sales on Tuesday. At 5.57 million, previously owned homes were down 2.3% in April after hitting a ten-year high in March. Average prices crept up as did the number of houses available on the market. There was little immediate reaction from the USD which remains mixed across the morning and slightly weaker against emerging market currencies.

CAD is up on a positive beat from the Bank of Canada. Their meeting minutes were released today, revealing a slightly more hawkish tilt. Recent concerns over the housing market were downplayed, the BoC mentioning that an improving labor market has bolstered consumer spending and the housing sector, trends that are becoming more broadly based across regions. “All things considered, Governing Council judges that the current degree of monetary stimulus is appropriate at present.” The BoC also anticipated that a strong first quarter may be chased by somewhat weaker data in Q2, which would dampen the negative effect on CAD should this materialize.

Speaking this morning on a panel in Madrid, ECB President Mario Draghi kept his cautious tone. Draghi admitted that the macroeconomic environment is improving, “our current assessment of the side-effects suggest therefore that there is no reason to deviate from the indications we have been consistently providing.” With little new information on the ECB’s outlook, the speech has had a muted reaction in the euro with EURUSD hanging around the 1.12 handle.

For the first time in over 25 years, Moody’s has downgraded China’s credit rating from stable to negative. As debt continues to climb and potential growth ebbs, “the downgrade reflects Moody’s expectation that China’s financial strength will erode somewhat over the coming years” said the ratings agency. Chinese officials were quick to criticize the call, questioning their methodology and saying that the agency had overestimated the risks to the economy. Surprisingly, we’re seeing a muted reaction in the Aussie dollar which fell only briefly, quickly recovering from the small dip against the greenback. AUD is usually quite sensitive to Chinese economic data as China is its largest trading partner.

EURUSD: Euro remains fairly flat against the greenback, pushing just below the 1.12 handle.

GBPUSD: Sterling slightly weaker as Britain raises the threat level following yesterday’s terrorist attack.

AUDUSD: Aussie dollar slightly lower after Moody’s downgraded China’s credit rating.

USDCAD: The Canadian dollar is up, as is the tone of the BoC. Canada’s central bank minutes came in more positive than investors expected, boosting CAD across the board.

USDJPY: Dollar higher against the yen and attempting a break above 112.