CAD Spikes, GBPUSD Outperforms, EURUSD Eyes FOMC - US Market Open
CAD:The Canadian Dollar spiked higher after the latest inflation data surprised to the upside with the headline figure at 2.4%, above the expected 2.1%, while the BoC’s preferred measure also rose above the 2% target. Consequently, this makes it hard for the BoC to follow in the dovish footsteps as the rest of the G10 complex (excl. Norges Bank & BoE). However, while data continues to beat expectations, USDCAD remains locked within its 2-month range, thus CAD crosses may prove better avenues to explore CAD strength, most notably against the Aussie and Kiwi.
EUR:The pre-FOMC lull has kicked in across major USD pairs. The Euro has traded within a 20pip range with price action also relatively stick given the $5bln+ vanilla option expiries around 1.1190-1.1210. The USD is defensive this morning, however, with the dovish bar set high for the Fed, there is a risk that the central bank fails to meet the dovish expectations. If indeed this is the case, EURJPY is vulnerable to losses.
GBP: Modest outperformance for the Pound this morning, which briefly tested the 1.26 handle. UK inflation figures were in line with expectations, however there was a notable jump in PPI figures, raising the risk that inflation could push higher in the near-term. Nonetheless, today’s data is likely to reinforce the hawkish rhetoric from the BoE at tomorrow’s monetary policy meeting.
Source: DailyFX, Thomson Reuters
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--- Written by Justin McQueen, Market Analyst
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