The U.S. dollar reigned supreme yesterday, rallying across the board and coming close to touching a 22-month best versus the Euro.
Overview
The greenback ceded some of those gains in the afternoon but remains at elevated levels. Indeed, the Bloomberg Dollar Index remains near a 6-week high.
The dollar gained the most against the Australian dollar that dropped to a two-month low after a report showed inflation fell in the first quarter. The slowdown in price pressures will now increase the pressure of the Reserve Bank of Australia to cut rates as soon as next month.
The domestic economic docket is empty and there are no schedule Fed speakers so the greenback will be forced to take its cues from developments abroad. The Bank of Canada monetary announcement at 10 a.m. is the largest risk event on today’s calendar.
What to Watch Today…
- Bank of Canada at 10 a.m.
Complete Economic Calendar can be found here.
EUR
The Euro came under pressure yesterday as European traders came back from the Easter holiday. Downward pressure on the common currency has persisted following weak data released in the region. German IFO Index of business confidence worsened, showing more worrying signs for Europe’s largest economy. French factory confidence also fell to almost a four-year low.
CAD
The Canadian dollar is weaker this morning as traders await the Bank of Canada’s interest rate decision. Market participants largely expect the central bank to keep rates on hold at 1.75%. Most expect the meeting to hold a dovish tone. Nevertheless, we expect the BoC to keep rates unchanged throughout the year even if the bank lowers its GDP estimates. OIS futures show a 32% chance the Bank of Canada will cut rates by September.
The rise in oil has also taken a breather, adding some selling pressure to the Canadian dollar.
