CAD Sinks on Dovish BOC

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Dollar Holding Below Resistance

The US dollar has been fairly stagnant over the last 24 hours. The lack of any key US data this week has created an absence of directional drivers which has seen the USD index remain in consolidation mode just below the recent 97.42 resistance level.

Some weakness in equities over the week as a result of concerns over the outbreak of the coronavirus has helped keep USD underpinned at recent levels.

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Euro Lower Ahead of ECB

EURUSD has been a little weaker today. The residual strength in USD over the week has weighed on EUR. The ECB meets today and while no change in policy is expected, traders will be keen to hear the details of the bank’s strategy review. Special attention will be paid to the details around the inflation target. EURUSD trades 1.1089 last.

GBP Pauses At Highs

GBPUSD has been a little softer today, pausing just below the recent 1.3152 highs. GBP has been much stronger over the week though upside has stalled over the last 24 hours.

Tomorrow the market will receive the latest manufacturing and services PMIs for the UK which have the potential to create volatility late in the week.

Risk Appetite Softening

Risk assets have been a little softer in recent trading. The outbreak of the Wuhan virus in China is prompting fears of a wide outbreak, as with the SARS virus, which is weighing on risk appetite.

With the Chinese lunar new year travel period coming up there are fears that the contagion will worsen. One case has already been reported in the US. SPX500 trades 3320.83 last.

JPY Sees Strong Rally, Gold Weaker

Safe havens have had a mixed start to early European trading with gold down against USD while JPY has been higher. Residual strength in USD has kept upside capped in gold this week while broader uncertainty around the Wuhan virus is fuelling strong safe-haven demand for JPY.

XAUUSD is currently challenging the 1554.69 level from above. USDJPY trades 109.57 last, having broken back below the 109.71 level.

Crude Crumbles on Bearish API

Oil prices have been lower today, extending decline across the week, as the spread of the Wuhan virus is causing concerns for the global oil demand outlook.

The API yesterday reported a 1.5 million barrel surplus in US crude inventories. The EIA will report its figures today, with the release delayed due to MLK day. Crude trades 55.89 last.

Loonie Higher Following Dovish BOC

USDCAD has been higher today following the sell-off in CAD seen in response to yesterday’s BOC meeting. The BOC kept rates on hold though fuelled expectations of a forthcoming rate cut with a more dovish statement and outlook on the economy.

The bank no longer refers to current policy levels as appropriate and traders now judge a rate cut likely in the near future. USDCAD trades 1.3162 last.

Aussie Jumps On Labour Data

AUDUSD has been firmer today with price rallying back above the .6850 level which was briefly pierced yesterday. Overnight, Aussie unemployment rate was seen moving lower to 5.1% from the prior and expected 5.2%. However, the outlook remains bearish with traders still expecting an RBA rate cut in February.

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