CAD Gains Cool Ahead of BoC, EURUSD Soft as Germany Heads for Recession - US Market Open

2019-01-08 14:45:00

MARKET DEVELOPMENT – CAD GAINS COOL AHEAD OF BOC, EUR SOFT AS GERMANY HEADS FOR RECESSION

USD: The US Dollar is notably firmer against major G10 currencies with markets pricing out the possibility of Fed rate cuts, while a pick-up in US yields have also brought investors into the greenback. Elsewhere, talk that US-China trade discussions are going well, according to President Trump has provided a boost for risk assets with US equity market tracking higher.

EUR: German data continues to deteriorate with the latest industrial production figures falling sharply. The monthly rate surprised to the downside with a fall of 1.9% (Exp. 0.3%), which in turn dragged the yearly rate to -4.7% (Exp. -0.8%). This also follows yesterday’s weak factory order, consequently increasing the risk that Germany is heading for a technical recession. As such, EURUSD is softer this morning in reaction to yet another soft reading out of Germany, while resistance at 1.15 also proved to be a stumbling block for the pair.

CAD: Amid the rise in oil prices, the Canadian Dollar continues to find support vs major counterparts, which in turn has seen USDCAD dip below 1.33. However, gains have somewhat slowed ahead of tomorrow’s BoC MPR, which provides a key risk to the currency.