It was a very busy and volatile day for the currencies yesterday as the dollar hit new 3 year lows and a dovish hike from the Bank of Canada saw excessive moves either side in the Loonie. A 25bps hike was widely expected from the BOC but market fears of the unknown ahead of the upcoming NAFTA talks with the US and Mexico were echoed by the central bank and this saw big moves in the currency with the UsdCad trading a 1.2372/1.2521 range on the day.
Prior to the Bank of Canada, there had been plenty of volatility across the majors with Cable probably the pick of the bunch maintaining its recent great run to the topside to trade up to a high around 1.3940. The Aussie and Kiwi also had relatively big days as Aussie broke through the 0.8000 psych level and Kiwi capped out at fresh highs around 0.7330 before they both dropped swiftly back into the range.
The US stock markets continued to power to the top side with the Dow finishing the day up 1.25% and nicely through the 26,000 level. Traders in Asia will be watching the market opens closely today to see if the momentum flows through to their session.
Looking ahead to the rest of today’s sessions and the main focus in Asia will be the Australian employment data with market expectation at +15k and the unemployment rate remaining at 5.4%. Last time out we experienced a good positive surprise and anything in line with that (+61k in Dec) could see the Aussie quickly revisit levels above 0.8000 again. Later in the day we have the Chinese GDP numbers due and the German Buba President Weidman is speaking close to the open of the London session. Into the New York session and the US Buliding Permits numbers are due alongside the Housing Starts and Philly Fed Manufacturing Index data.
Subscribe to RSA's FX Insight and get access to our daily market commentary.
If you have any questions or queries, please contact the team at info@sec.rakuten.com.au or visit our website.