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ECB meeting set to provoke fresh euro volatility

business-articlesECB meeting set to provoke fresh euro volatility
  • Euro vulnerable ahead of ECB commentary

  • Weak housing market to weigh on Canadian dollar

  • Rising jobless claims may drag on US dollar


Signs of ECB dovishness could dent euro today

The euro is likely in for fresh volatility today as anticipation mounts for the European Central Bank’s (ECB) December policy announcement.
While markets widely expect the ECB to finally wind down its long-running quantitative easing programme this is already effectively priced into EUR exchange rates.
If policymakers adopt a more cautious stance towards the prospect of future monetary policy this could see the single currency come under significant pressure.
Unless investors see reason to bet on the ECB raising interest rates sooner rather than later in 2019 the appeal of the euro could prove limited.

Canadian dollar vulnerable to weaker housing price index

With confidence in the outlook of the Canadian economy limited the Canadian dollar remains biased to the downside.
This afternoon’s new housing price index could put further pressure on CAD exchange rates if prices stagnate on the month as forecast.
Weakness within the housing market is unlikely to encourage confidence in the health of the economy as a whole, keeping the Canadian dollar on the back foot.
Even if oil prices push higher today this may not be enough to shore up CAD exchange rates.

US dollar under pressure ahead of jobless claims figures

After the disappointing easing in US inflationary pressure seen yesterday demand for the US dollar has diminished.
However, this afternoon’s US jobless claims data could offer a rallying point to USD exchange rates if signs point towards a continued tightening of the labour market.
Any uptick in jobless claims, though, may encourage investors to continue selling out of the US dollar for the time being.
Unless trade tensions between the US and China show signs of souring USD exchange rates are also likely to remain under pressure thanks to market risk appetite.

Upcoming Data:

Thursday, 13th December 2018
12:45 EUR European Central Bank Rate Decision
13:30 CAD New Housing Price Index
13:30 USD Jobless Claims

Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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