CAD continued to exhibit broad strength and outperform its peers at the European open, following yesterday’s comments from BoC’s Governor Poloz suggesting that rates could remain on hold at next week's decision, which resulted in the OIS forecasting a 40% chance of a rate cut next week compared to 80% before the speech. This prompted USD/CAD to continue on its downward trend into the European session as the pair failed to consolidate the break below 1.2400. Overnight, Chinese HSBC Manufacturing PMI (50.1 vs. Exp. 49.5 (Prev. 49.7) printed its first expansionary reading in four months and lifted the antipodean currencies as AUD/USD tripped stops at 0.7850, the move was further exacerbated by the weakened USD in the wake of the dovish Fed Chair Yellen’s semi-annual testimony.
The USD has trailed its major counterparts, initially to the benefit of EUR with EUR/USD making a technical break above yesterday’s highs while GBP/USD remained bid as the pair was further bolstered by hawkish comments made yesterday by MPC members Forbes and Weale, indicating that a rate hike may occur ahead of the markets expectations. However, heading into the European close the USD-index bounced off session lows capping some of the strength seen in GBP, EUR and CAD.
Looking ahead, the data slate provides no further tier 1 data release with market focus to fall on ECB’s President Draghi’s testimony to the European Parliament where he will explain the rationale behind the central bank’s decisions on monetary policy.
The USD has trailed its major counterparts, initially to the benefit of EUR with EUR/USD making a technical break above yesterday’s highs while GBP/USD remained bid as the pair was further bolstered by hawkish comments made yesterday by MPC members Forbes and Weale, indicating that a rate hike may occur ahead of the markets expectations. However, heading into the European close the USD-index bounced off session lows capping some of the strength seen in GBP, EUR and CAD.
Looking ahead, the data slate provides no further tier 1 data release with market focus to fall on ECB’s President Draghi’s testimony to the European Parliament where he will explain the rationale behind the central bank’s decisions on monetary policy.
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