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  
Market Concerns Eased

The first-round voting of the French presidential election was revealed on Sunday night...

Dollar Plunged on Trump Second Statement

The dollar index fell to a 2-week low of 99.91 in the early hours...

Markets Eye on the First Trump-Xi Meeting

US President Trump and Chinese president Xi Jinping, are scheduled to meet today at Trump’s Mar-a-Lago resort in Florida...


Will the French Presidential Election affect EUR?

The first round of the French presidential election...

USD Firms Ahead of Q4 GDP Final Reading

The dollar index has rebounded noticeably from a 4-and-a-half-month low of 98.85, helped by outperforming...

Divergence Between Fed and BoJ

The March FOMC meeting will be held for two consecutive days from today. The interest rate decision will be announced at 18:00 GMT on Wednesday 15th March...


Market Volatility Expected Ahead of President Trump's Speech

In a speech that will be watched by millions of viewers in the United States and around the world, the President is expected to speak of his presidency and address pressing issues like his plans for health care, the tax system, the military, and his goals for his administration...

Gold Trades Below Resistance Ahead of the Fed and NFP

We will see the release of the US ISM Manufacturing PMI, and ISM Prices Paid for January, at 15:00 GMT on Wednesday 1st February...

Sterling Struggles Ahead of Theresa May's Speech

Theresa May will make a speech outlining her plans for Brexit tomorrow, Tuesday 17th Jan, before the UK triggers Article 50 to leave the EU...

  


Share: