Investors have also been buying euros ahead of the European Central Bank rate decision. No changes are expected from the ECB but the recent uptick in inflation has many traders pricing in a year end rate hike.
The two best performing currencies today were the Australian dollar and euro which is a bit ironic because the Reserve Bank of Australia and the European Central Bank are two of the least hawkish central banks.
Wednesday’s Federal Reserve and Bank of Canada monetary policy announcements are the most important events on this week’s calendar.
We have not seen this type of volatility in the financial markets since the beginning of the pandemic.
Between hawkish FOMC minutes, a strong ADP report and surge in Treasury yields the U.S. dollar should be stronger. However in the last 48 hours, the greenback pulled back against the Japanese Yen, saw modest gains versus commodity currencies and consolidated against euro and sterling.
The greenback moved sharply higher against all of the major currencies with USDJPY closing in on a 4 year high.
The rally in currencies and equities continued on Thursday with the U.S. dollar extending lower.
The Federal Reserve took a big step in their battle with inflation today when they announced plans to taper asset purchases by $60 billion a month.
Currencies and equities have been consolidating ahead of Wednesday’s Federal Reserve monetary policy announcement.
Everything from equities, currencies to Treasuries and crypto have been itching for breakouts. With five major central bank rate decisions…
U.S. inflation numbers will be released tomorrow and economists are looking for the monthly CPI growth rate to slow and the annualized rate to accelerate.
At this pace, the Bank of Canada can no longer justify the current level of policy accommodation. The market is pricing in anywhere between 4 to 5 rate hikes by the BoC next year.