European Open: Cad weak, Euro & Gbp in focus

Asian equities generally followed Wall Street lower, although the Nikkei continues to hold onto recent key levels. S&P does appear to have lost more of it’s shine in comparison. The pullback in equities has influenced Jpy pairs, although there is not yet a “risk off” theme to play.
More important is the dovish slant we had anticipated ahead of the Bank of Canada meeting. Poloz noted that a “material slack” persists in the economy and pointed to lower oil prices and further declines in the terms of trade. Governor Poloz suggested that a change in fiscal policy (i.e. Trudeau’s new government) could impact the outlook, but that the BoC would have to wait to assess the impact. The canadian dollar does look weak now, especially vs. Nzd, Usd and Gbp. Further depreciation will also depend on the colour of today’s Retail Sales (14.30 CET).
Looking ahead, today’s main focus will be on the ECB. Consensus would be for both a pushback against the level of the currency and some signal on further QE. The bar has been placed rather high for Draghi, and as such there is a possibility that the ECB will disappoint, and the Euro will pop higher. The press conference at 14.30 CET is a “must watch”. Euro strength looks good vs. Cad today, and Euro weakness vs. Nzd.
The only other relevant data this morning comes from the UK: comments from BoE’s Cunliffe and the release of retail sales. While Cunliffe’s remarks may not shift perceptions of the BoE’s policy stance, further growth in retail sales  seems likely in September. The market is expecting 0.4% on the headline vs. 0.2% prior, and a stable 0.1% on the core.
Finally, we have US Existing Home sales  and Leading index at 16.00 CET – both high impact items,
expected 5.39 M vs. 5.31 prior and 0% vs 0.1% prior respectively.
Charts for today:
NzdCad
GbpCad
UsdCad
EurNzd

The post European Open: Cad weak, Euro & Gbp in focus appeared first on www.forextell.com.

Leave a Reply