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The European Central Bank may not have a monetary-policy meeting on the calendar but that does mean the euro will take a back seat. The FOMC rate decision alone has enough power to trigger big moves in EUR/USD but upcoming Eurozone PMIs and the German IFO report will also contribute to volatility. Although EUR/USD ended last week about where it started, it sold off 3 out of 5 trading days because everyone from ECB President Draghi to members Praet, Coeure and Villeroy made it very clear that they are in no rush to change their forward guidance. They felt that policy needs to be patient and persistent because inflation is subdued and euro strength could drive prices even lower. The uniformity of these comments are an important reason why euro has been under so much pressure. Investors will be looking to the upcoming economic reports for confirmation – if the data is weak, reinforcing the central bank’s views, EUR/USD will fall as the single currency underperforms. However if the data is good, it could help sustain the uptrend in the currency. The PMIs and IFO will be released the day after FOMC so the Fed's tone could have a larger impact on EUR/USD trade.
The cad canada was hit the hardest this past week. The loonie came under such heavy selling that USD/CAD broke through 1.30 to trade at its strongest level since July 2017. Although Canada received a “temporary exemption” from tariffs, President Trump’s tweet about Canadian trade on Thursday revived NAFTA concerns. Softer-than-expected housing data also added to the pain, reinforcing Bank of Canada Governor Poloz’s dovish comments at the start of the week. While Poloz expressed confidence in the economy, saying there’s untapped potential with room to expand, the possibility of this expansion happening without driving inflation means they are in no rush to raise interest rates.
Poloz “doesn’t know when they will be raising interest rates again,” and that line alone was enough to drive USD/CAD sharply higher. On a technical basis, if these gains are sustained, USD/CAD could climb as high as 1.32. Canadian inflation and retail sales are on the calendar but these numbers along with BoC Deputy Governor Wilkins’ speech are not due until the second half of the week. This means USD/CAD could extend its gains if investors respond positively to FOMC.
The cad canada was hit the hardest this past week. The loonie came under such heavy selling that USD/CAD broke through 1.30 to trade at its strongest level since July 2017. Although Canada received a “temporary exemption” from tariffs, President Trump’s tweet about Canadian trade on Thursday revived NAFTA concerns. Softer-than-expected housing data also added to the pain, reinforcing Bank of Canada Governor Poloz’s dovish comments at the start of the week. While Poloz expressed confidence in the economy, saying there’s untapped potential with room to expand, the possibility of this expansion happening without driving inflation means they are in no rush to raise interest rates.
Poloz “doesn’t know when they will be raising interest rates again,” and that line alone was enough to drive USD/CAD sharply higher. On a technical basis, if these gains are sustained, USD/CAD could climb as high as 1.32. Canadian inflation and retail sales are on the calendar but these numbers along with BoC Deputy Governor Wilkins’ speech are not due until the second half of the week. This means USD/CAD could extend its gains if investors respond positively to FOMC.
