- With the ECB policy meeting looming, investors are waiting to see the outcome. Focus will mainly be on whether they withdraw the easing bias that QE can be expanded.
- We expect the market to not react much if they keep their QE easing bias. The market will also be listening for any comment about the swift appreciation of the euro.
- If Draghi reiterates that the current financial conditions are accommodative, there most likely won’t be a reversal of the current uptrend.
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The BoC back at it again
- The CAD sharply rose yesterday when the BoC unexpectedly hiked their interest rates for the second successive time. The statement that came with the raise was quite hawkish.
- Officials explained that with recent strength of economic data, it confirmed their view that its recent boost is becoming relatively self-contained.
- The Bank stated they will follow and be guided by upcoming data as they watch out for inflation.
- USD/CAD toppled following the unforeseen hike. It broke two consecutive support levels, then ceased just above 1.2120(S1). It then rebounded and now trading just below 1.2260(R1).
As for today:
- We have Riksbanks own Interest rate decision and Eurozone’s final GDP for Q2 is out today.
- We also get jobless claims from the US for the week before September 1st, and in Canada we get building permits for July and Ivey PMI for August.
- The speakers we have today are President Draghi, Cleveland Fed President Loretta Mester and New York Fed President William Dudley.
- Support: 1.1880 (S1), 1.1830 (S2), 1.1730 (S3)
- Resistance: 1.1950 (R1), 1.2000 (R2), 1.2100 (R3)
- Support: 1.2120 (S1),1.2000 (S2), 1.1920 (S3)
- Resistance: 1.2260 (R1), 1.2335 (R2), 1.2430 (R3)