Critical Day for CAD, EUR, USD with BoC, Greece, Yellen on Radar
- EURUSD holding above $1.1000 pre-Greek parliamentary vote.
- USDCAD trading below C$1.2800 pre-BoC, pre-Yellen testimony.
The next two days are filled with central bank activity that will very likely impact FX markets.
Today at 10:00 EDT/14:00 GMT, the Bank of Canada will meet for its July policy meeting, against a backdrop of deteriorating Canadian economic data and growing concerns about a recession having developed in Q1'15. At the same time today, Federal Reserve Chair Janet Yellen will hit Capitol Hill for day one of her two day semi-annual Congressional testimony.
While Fed Chair Yellen's testimony will continue into tomorrow, the focus initially on Thursday should be on the European Central Bank. The last few weeks have seen increased pressure on the ECB to step up as a lender of last resorts for the Greek banking system, and it is very likely that the outcome of today's Greek parliamentary vote - in which Greek legislators will have to try and pass a bailout package whose terms are much harsher than those summarily rejected by the July 5 referendum - will determine whether or not the ECB continues to provide liquidity to Greek banks.
Overall, the stage is set for a critical next two days for EURUSD and USDCAD in particular (although all CAD-, EUR-, and USD-pairs are likely to see increased volatility relative to the 'calm' of the past 12-24 hours.
--- Written by Christopher Vecchio, Currency Strategist
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