ECB and Fed speak driving volatility
Interesting times
USD: More Central Bank officials have confirmed the intention to begin tapering bond buying. These comments are despite last week's weak employment numbers, and the surge in Covid cases which may both de-rail an economic recovery.
Tapering has previously been accompanied by rising interest rates and therefore a stronger currency. Central banks are attempting to de-link these 2 events, to avoid an immediate ‘stamping on the brakes’ of the economy. The USD has strengthened over the past week, but is trading cautiously.
EUR/USD at 1.1800 / GBP/USD at 1.3750 … both trading near the lower end of 3month ranges.
EURO: this link to a CNBC article is useful, regarding this afternoon’s Central Bank meeting:
With Inflation sky-rocketing in Europe, tapering could well be around the corner – the consequences of which are confused by trying to ‘equalise’ the effects across the varied EU economies. As such, an equilibrium in the € currency might be difficult to find. Volatility ahead, we think – alongside a very important afternoon ahead. Tomorrow morning we have ECB President Lagarde speaking as well, to add to the fun!
GBP/EUR at the lower end of recent ranges at 1.1650
CAD: Weaker yesterday after the Central Bank decision and announcement on bond-buying. The wait-and see approach wasn’t a surprise as a snap election has been called by PM Trudeau. CAD will be volatile until the outcome is known! USD/CAD at 0.7850 is near the lowest in the last 3months.