Login
USD
Yesterday, the broad dollar reversed almost all of its early week slide, seeing the DXY index climb 0.7% off its mid-week low to leave it hovering just shy of 101. So far this morning, however, it is the increasingly aggressive noises offering support for the Chinese economy that are driving FX price action. Headlines signalling further policy easing combined with direct fiscal stimulus to consumers have boosted risk-sensitive currencies, with most in the green through early trading. Later today we expect the focus to return to the US, with annual GDP revisions and a third reading for 2Q growth the main data events of note. That said, the Fed is still front of mind for traders, so with no fewer than seven Fed speakers on the docket, including Chair Powell, it should be a busy day for FX markets.
EUR
Tuesday’s dollar rally saw a corresponding slide for EURUSD. That said, with the pair giving up just 0.4% over the day, the euro continues to trade rich relative to our view on the bloc’s fundamentals. However, we doubt this dynamic will be disrupted by any data today. Confidence indicators are the main releases of note and are unlikely to prove market moving. ECB speakers, however, will be worth keeping an eye on, with some big beasts of the ECB set to hit the airwaves. President Lagarde, de Guindos, and Schnabel all speak later today. While a circumspect set of commentary is this most likely outcome, odds are skewed towards a dovish steer on rates after Monday’s grim PMI reports. This leaves risks for the euro skewed to the downside today, despite the single currency making headway this morning on positive news out of China.
GBP
The pound traded in line with broader market moves on Wednesday, sliding 0.7% against the dollar and 0.3% against the euro, with a quiet data calendar leaving only a speech by the BoE’s Megan Greene for sterling traders to chew on. If anything, today should see even lighter GBP price action, with the docket of UK events entirely blank. This should see the pound’s fortunes once again in the hands of external events – a situation unlikely to change until next week.
CAD
The loonie pared some recent gains on Wednesday, though still managed to outperform much of the G10 complex, with USDCAD rising just 0.4%. Today, however, we think this dynamic is set for a reversal, with the release of the CFIB business barometer and SEPH employment change as the key events coming up. Both should point to further disappointment regarding the state of Canadian growth. Moreover, with this message likely to be hammered home by tomorrow’s GDP reading, we think the stage is set for loonie underperformance heading into the weekend.