News & Analysis
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The Canadian dollar was one of the more exciting G10 currencies against the dollar last week with only the Norwegian krone and British pound proving more volatile.
This week’s FOMC meeting not only marks the first of eight meetings in 2020 but also the first time Jerome Powell faces both media and markets since the phase one trade deal was signed.
Thursday’s MPC decision will be the least clear cut in years, with UK data uncertainty and global conditions providing compelling arguments for both an “insurance” rate cut and for no change.
G10 FX markets are trading with a risk-off feel this morning, with the US dollar up against much of the G10, but down versus JPY and flat against EUR. The parameters of the virus’s epidemiological characteristics, namely its virulence and fatality, will be in focus this week, as will the extent of its international contagion.
The general election seems to have made a world of difference in UK business sentiment, which picked up sharply in January after what appears to have been a dismal fourth quarter.
Sterling traded in a tight range yesterday after showing a significant bout of strength on Wednesday due to November’s strong labour market data. The Bank of England rate decision at the end of the month remains the only game in town for the pound with swap markets pricing in a 50% probability of a rate cut.
The reaction in the loonie is just what the Bank of Canada needed with economic activity practically grinding to a halt in Q4. While transitory events are likely to taint the GDP figure at the back end of last year, suppressed economic activity along with rising...
The euro has reached fresh lows for the year after Christine Lagarde’s second press conference as ECB President. The ECB kept rates on hold, and formally announced the scope of its monetary policy strategy review.
The euro continued its two-way price moves yesterday and remained well within this week’s range, but saw a short drop after US President Donald Trump threatened to impose “very high” tariffs on car imports from the EU if the bloc does not agree to a trade deal.
Sterling has seen a small upwards move on the news, with both GBPEUR and GBPUSD reaching the highs of the day. The report does clearly show an improvement in business sentiment, including all-important investment intentions.