CAD: Rates held firm, dovish undercurrent
Whilst there were no surprises at the base rate staying at 1.75%, there was emphasis on a softer tone used to address the markets which certainly caught them off-guard. This ties back into the latest GDP revisions which would suggest there is room for “non-inflationary growth”. The main driver behind the CAD sell-off is that the March rate hike is now in question.
Whilst not directly related, OPEC will be meeting today to outline possible production cuts in 2019. Given the intertwining of commodities and currencies, this will be a very important meeting in what has been a very volatile few months for oil and natural gas to name just two.
GBP: Remains drifting in space
The data calendar is non-existent for GBP pairs, so we will resume normal protocol and await media updates from the House of Commons.
The DUP has again stressed that it will not vote for May’s deal unless changes are made. We’ve seen this rhetoric plenty of times before, and not just from the DUP. Time is now running out for everyone involved and we are stuck on the sidelines. Whilst the volatility levels remain very high, the FX volumes remain low, as traders would rather not pile into the unknown just yet. If anyone claims to have a good grasp of the situation, then they are lying.
USD: Risk very much back on
Donald Trump is asking for OPEC to be sensible about oil flows for 2019, stating that no one wants to see oil prices climb higher. With the added tensions via US/Saudi relations, this is likely to apply pressure to the US Dollar.
US and China relations were back in the spotlight as the CFO of tech giant Huawei was arrested and extradited to the States. This immediately dampened the progress being made after the G20 meeting and the subsequent press conferences from both sides.
With Non-Farm job data due out tomorrow, the US data calendar remains in the background.
Have a great day.