Canadian Dollar And Mexican Peso Bounce
Axi | Apr 27, 2017 14:35
Originally published by AxiTrader h2 Markets Overview:/h2
- Equities: Nikkei 225 (-0.28%), Hang Seng (-0.04%), CSI 300 (-0.55%), KOSPI (-0.13%), S&P/ASX 200 (+0.08%)
- Commodities: WTI Crude $49.39 (-0.4 %), Brent Crude $51.63 (-0.37%), Natural Gas $3.26 (-0.46%), Gold $1266.96 (-0.18%), Copper $259.10 (-0.37%)
The Bank of Japan left rates unchanged, as expected. The BoJ noted that Japan's economy is turning towards a moderate expansion, but that the economic and price risks are still tilted towards the downside. It added that there is a lack of momentum in reaching the 2% inflation target, and long-term inflation expectations remain weak.
There wasn't much of a reaction in the market, and the press conference at 0730 GMT is unlikely to deliver any surprises. It seems quite likely that the BoJ will keep rates and QE unchanged for a while.
Asian equities declined overnight. US President Trump’s tax plan disappointed the market a bit. It lacked details, and there is a long road ahead before any tax bill is passed. However, at least Trump signalled that he is still serious about the tax reform, and that he is moving forward with it.
In FX, the Canadian dollar and the Mexican peso saw the highest volatility during the Asian session. USD/CAD fell from 1.3650 to 1.3530 and USD/MXN from 19.20 to 18.95 after it was announced that Trump will not terminate the NAFTA treaty. However, the outlook for the Canadian dollar still remains weak amid declining oil prices and the US imposing tariffs on Canadian goods. Expect solid support in the area between 1.3490 and 1.3525.
Today, the ECB will decide on interest rates. It is highly unlikely that rates or the size/duration of the QE programme will change. The press conference with Mario Draghi will be of more interest to traders, though. While the central bank will very likely maintain its status quo, and refrain from too hawkish statements, Draghi and his team might acknowledge the recent, strong economic data out of the Euro Zone countries. This could boost the euro a bit.
In the afternoon, we will also get German inflation and US initial jobless claims data. It is expected that inflation in Germany increased slightly in April. The headline CPI figure is expected at 1.9 % (year-on-year), up from 1.6 % last month. For the initial jobless claims, the market is looking for a 245k print (up from 244k last week).
h2 Economic Calendar:/h2- 12:45 GMT - ECB Rate Decision
- 13:00 GMT - German CPI
- 13:30 GMT - US Durable Goods Orders
- 13:30 GMT - US Initial Jobless Claims
- 13:30 GMT - ECB Press Conference
- 15:00 GMT - US Pending Home Sales
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