Relief for the Canadian dollar

22 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  
Peaked trade optimism?

Throughout the past week, the US dollar has received support after strengthening expectations that the Fed will take an extended break after three consecutive rate cuts...

Russel 2000 doesn't support S&P500 optimism

S&P500 closed Monday at historical highs, adding 0.55% on the day close. Both expected new Fed interest rates cut and possible...

Oil drops on weak corporate data out of China

Oil prices fell on Monday after strong gains last week, as data released in China reinforced signs that its economy is slowing, though progress...


Market Sentiment Hinging On Progress In Brexit

The British parliament will vote on the Brexit agreement today at 18:00 GMT. In theory, this should be a simple vote, with a definite...

Market shows demand for yielding assets

The market shows demand for yielding assets, which in turn supports demand for the stocks and currencies of emerging markets. The main...

Yuan and Dollar as a weapon in trade wars

The US Nonfarm Payrolls on Friday could even be called boring: the report showed the preservation of a completely healthy labour market...


Disappointment with Fed and tariffs

Trump announced 10% tariffs on Chinese goods worth $300 billion since September 1, thus ending the US-China trade truce after disappointingly...

Fed pushes down stocks

Markets have started the week under pressure. Expectations that the Federal Reserve will cut interest rates by 50 points in July collapsed...

Gold updates new 6-years highs

Gold benefits from a combination of two factors: lower interest rates in debt markets and continuing hopes that the global economy...

  


Share it on:   or