Relief for the Canadian dollar

21 January, 2016

There are two major currencies that have been one-way streets lower so far this year, namely the yen and also sterling. The Canadian dollar at least got a break yesterday, the first day of appreciation vs. the US dollar in 13 trading sessions, down by more than 4% so far this year, as the Bank of Canada kept rates on hold. The central bank was relatively upbeat on the economy, all things considered, which allowed short-dated bond yields to rise on the reduced prospect of easing later this year. But many in the market do not share the Bank of Canada’s optimism, especially as the oil price continues to travel south. Sterling is interesting because it’s not been an interest rate story so far this year, with the weakness of the currency more coming from the lack of safe haven properties, with a sizable current account deficit (to GDP) and a potential referendum on EU membership later this year. The overnight tone to equities has remained fragile, as has been the case with oil, Brent now comfortably trading with a 2 handle. Elsewhere, the yen has firmed on the back of comments from the BoJ undermining expectations of further near-term quantitative easing.

The main focus today will be with the ECB meeting result at 12:45 GMT, with the press conference following at 13:30 GMT. There are no expectations of further policy action, but naturally the euro will be sensitive to hints of easing measures given the recent volatility in financial markets and weakness of the oil price. The latter will mean that the ECB will likely see its projections for headline inflation for this year revised down at some point. The single currency itself has been holding up relatively well so far this year, largely because the dollar has corrected on the back of reduced expectations of Fed tightening and currencies are a relative game, so the euro is looking one of the least bad to be in.


Source link  
Economic calendar is relatively light

Today is Martin Luther King’s Birthday, which is a Bank Holiday in the United States. As a result, the Economic Calendar is relatively light today...

US Tax Bill passes

On Wednesday, the US Senate approved the tax bill 51 for and 48 against, while the House of Representatives gave it final approval, passing it for the second time in two days after...

US dollar 'treading water'

USD is treading water ahead of the expected enactment of President Trump’s tax bill. The initial euphoria of lower corporation tax, that many...


CB Monetary Policy Unchanged

Thursday saw the latest Monetary Policy Committee (MPC) report from the Bank of England. The BoE stated that further modest increases...

No Surprises as Fed Raises Rates

The Federal Reserve, as expected, raised its benchmark interest rate by a quarter of a percentage point, to a range of 1.25% to 1.5%. The latest hike...

CB meetings dominate the week

With no impactful economic data releases on the calendar today, the markets are focusing on a plethora of Central Bank meetings scheduled...


No Surprises from BoC & ADP

In an unsurprising move, the Bank of Canada decided to hold its benchmark lending rate at 1%, after two small hikes earlier in 2017. The BoC stated...

Moderate Gains for USD

On Monday, the US Commerce Department released Factory Orders data for October, indicating that the continued strength in the Manufacturing...

OPEC Extends Output Cuts

On Thursday, OPEC (Organization of Petroleum Exporters) and non-OPEC producers led by Russia agreed to keep output cuts until the end of 2018...

  


Share: