CAD crunched as door 'obviously' open to......>

FOREX: CAD crunched as door 'obviously' open to rate cuts

- USD/CAD bulls were rewarded Wednesday as the Bank of Canada erred particularly

dovishly despite holding rates alongside expectations. In the accompanying

statement the Bank dropped the word 'appropriate' in maintaining interest rates,

and growth forecasts were revised sharply lower. USD/CAD responded by rallying

sharply, finding little resistance at the C$1.31 handle before stalling just shy

of the 50-dma at C$1.3151. This becomes the next target for those looking for

further upside.

- GBP was the major outperformer, bouncing back as CBI trends data (not usually

such a market mover) was unusually optimistic. This raises a considerable upside

risk for this Friday's PMI print - also a sentiment based survey. Implied

probability of a BoE rate cut next week fell in tandem.

- Equity markets were more mixed, with a pullback in European bourses countered

by further strength in the US. This prompted USD/JPY to finish broadly flat. 

- Australian jobs, weekly jobless claims from the US and rate decisions from the

ECB and Norges Bank are due Thursday.