Momentum Scorecard: Euro Looks ToOutperform Versus CAD, USD
USD/CAD- Trading The Bank Of Canada(BoC) Rate DecisionAll Eyes on Bank of England Minutes,Bernanke Testimony
The US Dollar recovered against its major counterparts inovernight, adding as much as 0.3 percent on average, as marketsdigested the largest decline in four days recorded over the prior24 hours. All eyes are now on Federal Reserve Chairman BenBernanke two days of semi-annual testimony to the US Congress.
Traders are looking to the central bank chief’s comments to
inform expectations for the timing and size of a reduction of the
Fed’s QE effort.
Bernanke has been busy highlighting the difference between
“tightening” monetary policy and “tapering” asset purchases
recently after markets ran with pricing in a hawkish shift in theposture of the rate-setting FOMC committee following the Junemeeting. That move produced a sharp jump in US bond yields andsent risky assets tumbling. The greenback is likely to come under
renewed pressure if the rhetoric emerging out of today’s
testimony continues to stress a need for accommodation and thedata dependence of the decision to taper QE purchases.
The release of minutes from July’s Bank of England policy
meeting, the first one with Governor Mark Carney at the helm, isin focus on the European economic calendar. Investors will bekeen to see how the new leader of the central bank voted on thematter of expanding QE and what logic went into the decision toissue an accompanying statement (a move unusual for the BOE at
times when it doesn’t change the policy mix).
All else being equal, the British Pound is likely to rise if Carneyvoted against more QE, and vice versa. Hints of change in the
central bank’s strategy in delivering policy support –
such as theintroduction of Fed-style forward guidance on how long rates arelikely to remain low
will probably weigh on Sterling however.
Separately, economists’ forecasts call for an 8,000 decline in UK
Jobless Claims in June, putting total outstanding applications forbenefits at the lowest since March 2009.
SELL EURUSD BELOW1.3120 TGT 1.3100/1.3080SL 1.3150
BUY USDJPY BELOW 99.80TGT 100.00/100.20 SL99.50
BUY GBPUSD ABOVE1.5250 TGT 1.5280/1.5300SL 1.5230