Comments from Fed Brainard did little dent on EurUsd. Bids are again seen scattered in the main platform from 1.0535 – and Euro stalled at 1.0529. I am only guessing that part of these buying could be for the large option strike at 1.0500, near Eur3bn for March 6 NY cut.
As expected, BOC rates unchanged and statement points to weakness in wages and hours worked as signals of slack in the labour market. Our guys see BOC on hold till next year. Spreads of US/Canada will continue to widen, spreads pointing to 1.40. Today, Canada releases Dec GDP. We think it will likely print above the BOC’s MPR forecast, it will take a lot more than a 0.5%-pt beat in one quarter to shift the stance of the central bank. UsdCad should stay above 1.3282, the 100-Day SMA. The pair stayed firm and printed 1.3359. Clear break above 1.3358, which is the 61.8% retracement is significant.