FX: The Stealth Rally In USD/CAD
Market Drivers June 28, 2017
Euro hits fresh multi month highs
End of month flows help
Nikkei -0.47% Dax -0.92%
Europe and Asia:
USD Trade Balance 8:30
USD Wholesale Inventories 8:30
USD Pending Homes 10:00
It's been a much more subdued night of trade in the FX market with most if the majors sticking to narrow ranges amidst little fresh newsflow and only some end of month demand. Still, EURUSD continued to power higher rising to 1.1388 in early European dealing before running into offers ahead of the key 1.1400 figure.
The euro continues to see demand after yesterday's hawkish comments from Mario Draghi which suggested that the ECB may be ready to signal a change in policy relatively soon moving from an accommodative to a neutral stance. The euro also saw some demand from end of month flows on the crosses as both EURAUD and EURGBP rallied into the morning session.
With no significant data on the docket today, the FX markets may once again react off central banker rhetoric. Today chiefs from BOC, ECB, BOJ and BOE are expected to take sit in on panel at 13:30 GMT and any comments that ensue could move markets.
Aside from Mr. Draghi the one other central banker that has been unabashedly hawkish is Stephen Poloz from Bank of Canada. In a testament to Mr. Poloz' aggressive turn to a less accommodating regime, the loonie has managed to rally for the past few week despite the drift lower in oil prices. Tonight USDCAD traded to a low of 1.3128 and may broach the key 1.3100 support level if Mr. Poloz reaffirms that the central bank will no longer pursue an accommodative path.
If oil price manage a rally back to $45/bbl level the move in loonie would only accelerate and the pair could push towards the key 1.3000 figure over the near term horizon.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.