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TALKING POINTS – EURO, ECB, US DOLLAR, POWELL, CANADIAN DOLLAR, BOC, YEN

  • Euro unlikely to find lasting cues in December ECB meeting minutes
  • US Dollar might rise if Fed Chair Powell moderates dovish rhetoric
  • Canadian Dollar down after BOC, Yen up as Japanese stocks decline

Minutes from December’s ECB policy meeting headline an otherwise lackluster economic calendar in European trading hours. The release may not offer much by way of directional guidance for the Euro considering markets have already priced out an interest rate hike in 2019.

Later in the day, the spotlight turns to scheduled comments from Fed Chair Jerome Powell. A dovish surprise seems unlikely considering the extent to which the markets’ policy bets have already shifted in that direction, especially after yesterday’s FOMC minutes publication.

Balanced rhetoric suggesting the central bank’s recent pronouncements were meant to signal the absence of pre-commitment rather than an abandonment of tightening altogether might catch markets wrong-footed however. That might trigger a rebound in the US Dollar.

CANADIAN DOLLAR DOWN AFTER BOC, YEN UP AS JAPAN STOCKS FALL

The Canadian Dollar underperformed in Asia Pacific trade, sliding against all its major counterparts. The move seems to reflect ebbing BOC rate hike expectations following cautious rhetoric accompanying yesterday’s monetary policy announcement. The anti-risk Yen rose as stocks in Japan declined.

See our market forecasts to learn what will drive currencies, commodities and stocks in Q1!

ASIA PACIFIC TRADING SESSION

US Dollar Eyeing Powell Speech, Euro May Overlook ECB Minutes

EUROPEAN TRADING SESSION

US Dollar Eyeing Powell Speech, Euro May Overlook ECB Minutes

** All times listed in GMT. See the full economic calendar here.

FX TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter