News & Analysis

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CAD feels the pain as equities and oil tumble

CAD feels the pain as equities and oil tumble

The loonie’s 0.5% decline overnight is reflective of the unfavourable shift in cross-asset risk conditions that is weighing global equities, oil benchmarks, and US yields for all of the wrong reasons. read more

Week Ahead: The return of the data calendar

Week Ahead: The return of the data calendar

Markets have primarily traded on titbits of economic information over the past week, however next week, the data calendar packs more of a punch. read more

Bullish drivers for CAD are starting to disappear

Bullish drivers for CAD are starting to disappear

With the dollar fighting back today as traders look to take some risk off the table, USDCAD has already retraced yesterday’s slight move lower. read more

Loonie posts lacklustre gains as crude drops and US growth warnings flash

Loonie posts lacklustre gains as crude drops and US growth warnings flash

After wild gyrations during the relentless onslaught of US data yesterday, the loonie closed 0.15% stronger than when it opened. read more

US PMI data brings bad news for economic growth, but good news on inflation

US PMI data brings bad news for economic growth, but good news on inflation

November’s flash PMIs today suggest that the economic contraction in the US is occurring at a faster rate than the eurozone. read more

November’s PMIs point to a shallower eurozone recession

November’s PMIs point to a shallower eurozone recession

Today’s eurozone PMIs extended the broad theme of positive surprises in eurozone economic data and have helped allay fears of a deep upcoming recession. read more

November’s flash PMIs provide slight lift for the pound, but worse still to come

November’s flash PMIs provide slight lift for the pound, but worse still to come

In a similar fashion to the eurozone measures released earlier this morning, the UK flash PMIs for November exceeded expectations. read more

CAD rally may be over as the pressure from US rates likely to return

CAD rally may be over as the pressure from US rates likely to return

After two consecutive trading days of losses, Tuesday saw the Loonie appreciate by 0.6% against the US dollar with positive cross-asset price action. read more

False reports on OPEC induces volatility in otherwise benign session for CAD

False reports on OPEC induces volatility in otherwise benign session for CAD

A general feeling of market malaise led the loonie to slowly weaken throughout yesterday, alongside most other risky assets. read more

CAD comes back under pressure as risk appetite fades

CAD comes back under pressure as risk appetite fades

This morning, with equity futures trading in the red and commodities slumping on negative growth headlines out of China, the loonie is back under pressure. read more

Week Ahead: Respect the ranges

Week Ahead: Respect the ranges

In our latest Week Ahead, we discuss how far the dollar can drop, and the potential market impact of a renewed escalation in Russia's war in Ukraine. read more

Loonie realigns with broad G10 move after Wednesday’s idiosyncratic sell-off

Loonie realigns with broad G10 move after Wednesday’s idiosyncratic sell-off

The loonie held flat against USD on Thursday, weakening during the European session, reversing all losses after the North American trading session began. read more

UK budget thrusts weak economic fundamentals back into sight for traders

UK budget thrusts weak economic fundamentals back into sight for traders

Chancellor Jeremy Hunt took a much more orthodox approach to today’s Autumn statement following the disastrous mini-budget. read more

Loonie slips following final CPI report before December’s meeting

Loonie slips following final CPI report before December’s meeting

The loonie was yesterday’s biggest loser on the G10 currency board, falling 0.3% against the greenback on a slowdown in core inflation. read more

Canada CPI doesn’t conclude debate on December’s rate hike

Canada CPI doesn’t conclude debate on December’s rate hike

Canadian consumer prices rose by 0.7% in October, slightly missing the consensus estimate of 0.8% MoM. read more

CPI reading for October will prove influential for BoC’s next steps

CPI reading for October will prove influential for BoC’s next steps

All the stars aligned for the loonie to strengthen yesterday, but despite a supportive backdrop, CAD’s 0.2% gain against USD was relatively modest. read more

Headline inflation isn’t as worrying as the steady core figure

Headline inflation isn’t as worrying as the steady core figure

Headline inflation in the UK jumped a full percentage point from 10.1% to 11.1% in October, primarily due to the higher Ofgem default energy cap. read more

Canadian dollar rallies back close to last week’s highs on improved risk conditions

Canadian dollar rallies back close to last week’s highs on improved risk conditions

This morning, amid a renewed risk-on environment, the loonie has more than reversed yesterday’s marginal losses. read more

USDCAD may struggle to break 1.32 before Wednesday’s inflation data

USDCAD may struggle to break 1.32 before Wednesday’s inflation data

After falling 3.65% to lows last seen in mid-August in the 36 hours following October’s CPI report, the dollar is stabilising this morning. read more

Week Ahead: After a rocky week for the US dollar, eyes move to the UK government

Week Ahead: After a rocky week for the US dollar, eyes move to the UK government

Next week, looming large for markets is the release of the new UK government's first budget statement, which is likely to have a seismic impact on GBP. read more

Cool US inflation data sparks rout in US dollar

Cool US inflation data sparks rout in US dollar

Markets have increased bets that the Fed would slow the pace of monetary policy tightening, selling out of USD and buying in to perceived riskier assets. read more

“Red wave” turns purple as markets buy back in to the buck

“Red wave” turns purple as markets buy back in to the buck

The Republicans failure to secure the ‘Red Wave’ in the US midterm elections has meant markets no longer expect any significant economic policy changes. read more

Dollar remains soft amidst quiet market conditions

Dollar remains soft amidst quiet market conditions

US midterm election results started filtering through overnight, with no clear outcome as yet, but speculation of Republican victories has not materialised. read more

US dollar on the back foot – for now – as global sentiment improves

US dollar on the back foot – for now – as global sentiment improves

Boston Fed President Susan Collins has indicated that monetary policy could enter into a new phase, where smaller interest rate increases were required. read more

Week Ahead – Divergence: Major central banks start to split

Week Ahead – Divergence: Major central banks start to split

Whilst profit taking from the sharp strength in USD, this week may see pullback, but the dollar is likely to stay as the markets preferred store of value. read more

Loonie gains again in the aftermath of BoC decision

Loonie gains again in the aftermath of BoC decision

The Canadian dollar posted phenomenal employment data on Friday, pushing the currency to its strongest level in a month against the US dollar. read more

Bank of England forecasts longest recession since records began

Bank of England forecasts longest recession since records began

The Bank of England forecast that the economy would fall in to its longest recession since records began, predicting growth will only likely return in 2024. read more

Fed hike strengthens USD; spotlight now moves to BoE

Fed hike strengthens USD; spotlight now moves to BoE

The big day is finally here for sterling, with today’s Bank of England meeting placing the currency firmly in to the market spotlight. read more

All eyes on the Fed

All eyes on the Fed

Having pared some of its gains over recent trading sessions, the loonie remains close to its strongest level over the past month against the US dollar. read more

US dollar regains ground ahead of tomorrow’s Federal Reserve decision

US dollar regains ground ahead of tomorrow’s Federal Reserve decision

Yesterday, movement in USDCAD was fairly limited, making it one of the better performers in the G10 space. With the Federal Reserve decision set for tomorrow, volatility will likely be high. read more

Monex’s November 2022 FX Forecasts

Monex’s November 2022 FX Forecasts

For now, our outlook on the dollar remains constructive until jobs and inflation data allow the Fed to downshift. read more

Growth data and likely peak of its tightening campaign to set the loonie trend in the short term

Growth data and likely peak of its tightening campaign to set the loonie trend in the short term

CAD On Friday, an underwhelming monthly GDP growth figure kept the Canadian dollar on the back foot, having now lost over 1% against the US dollar over the past two trading sessions. Despite the economy remaining in positive territory with a better-than-expected 0.1% positive growth number, the underlying data indicated an economy that is only crawling at the moment. In the context of surprisingly dovish central bank policy makers, with the Bank of Canada indicating last week that at a base rate of 3.75% it is now near the peak of its tightening campaign, markets have now firmly backed away from the bullishness on CAD that saw it gain over 3% against USD since the middle of October. This week, the first point of note on the economic data calendar is BoC Governor Tiff Macklem’s testimony to a government economic committee tomorrow. USD Trading on the dollar is largely being driven by speculation over this weeks Federal Reserve announcement on monetary policy. Speculation had been growing over recent trading sessions that the Fed would signal a slowdown in its aggressive rate hiking cycle, and as a result, the dollar had been gradually weakening. These bets appear to have cooled based on overnight trading, with the greenback broadly stronger after trading in Asia. This speculation, that the Fed would ‘pivot’ towards a softer attitude to curbing inflation, dampened not least by US consumer spending data on Friday, which rose more than expected in September, with consumer spending up 0.6% month on month. Despite several further data points set to be released ahead of the Fed meeting on Wednesday, we expect the dollar to remain firm heading in to Wednesdays meeting. EUR The euro opens the morning trading lower against its main pairing, the US dollar, as investors continued to digest last week’s interest rate decision from the European Central Bank. Having hiked rates by 75 basis points, to have the deposit rate for the eurozone now sitting at 1.5%, the markets initial reaction had been positive, boosting the euro above parity on the midmarket. Indeed, the rise in interest rates from the ECB have represented the fastest pace of hikes on record for the central bank. Nonetheless, with headline inflation sat at 9.9%, and the key German, Italian, French and Spanish economies all forecast to contract next year, the economic outlook remains grim. Indeed, it did not take long for political dissent to emerge, with France President Emmanuel Macron stating the central bank is “smashing demand” to tackle inflation, which only sits at 5.6% in his country, and Italian Prime Minister Giorgia Meloni calling the hikes “rash”. Today, the data calendar sees the release of preliminary quarterly GDP figures from Italy, which are expected to show a 0.1% contraction after a 1.1% gain last quarter, and monthly inflation figures for the eurozone as a whole, which are expected to remain at 9.9%. GBP A quiet start to the new week for sterling, with the pound now simply consolidating its recent recovery against its major peers. Specifically against the US dollar, the currency now sits almost 12% higher than the flash midmarket lows posted in the aftermath of the previous UK administrations now-infamous ‘mini-budget’ in September. With no economic data due today, market interest will be focused on Thursday’s Bank of England monetary policy meeting, where the central bank will release updated economic forecasts, and its latest interest rate guidance. The UK has experienced severe economic turmoil over the past six weeks, triggered by government policy, but the UK’s new administration, led by Rishi Sunak, has indicated that it will not release its new economic strategy till November 17th. This means that the central bank is to some extent working in the dark at the moment, meaning that its announcements on Thursday are likely to be highly caveated, and therefore volatility in sterling will likely pick up with gusto in the second half of this week.     Disclaimer This information has been prepared by Monex Canada Inc., an execution-only service provider. The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice on which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. No opinion given in the material constitutes a recommendation by Monex Canada Inc., or the author that any particular transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, it is not subject to any prohibition on dealing ahead of the dissemination of investment research and as such is considered to be a marketing communication.   read more

Week Ahead: Fed pivot won’t be evident next week

Week Ahead: Fed pivot won’t be evident next week

In next week’s Fed meeting, we expect a further 75bps hike and a hawkish tone to keep financial conditions tight until inflation pressures start to subside. read more

CAD may come under renewed pressure today from hawkish Fed pricing 

CAD may come under renewed pressure today from hawkish Fed pricing 

Continuation in negative earnings reports in US stocks today will likely see the dollar end the week on a stronger note than it started. read more

ECB meets expectations with a 75bps hike, TLTRO adjustments, and QT delay

ECB meets expectations with a 75bps hike, TLTRO adjustments, and QT delay

The European Central Bank hiked interest rates by 75bps today, bringing the deposit rate to 1.5% and the main refinancing rate to 2%. read more

BoC decision to slow the hiking cycle unexpectedly supported the loonie

BoC decision to slow the hiking cycle unexpectedly supported the loonie

This morning, following a 0.4% rally in yesterday’s session, the loonie is down 0.2% as the broad dollar fights back.  read more

BoC meets our call for 50bps, missing economist and market expectations

BoC meets our call for 50bps, missing economist and market expectations

The Bank of Canada raised its policy rate on Wednesday by 50bps to 3.75%, missing market expectations for 75bps but coming in line with our forecast. read more

Today’s BoC decision isn’t clear cut, meaning event risk is large for CAD

Today’s BoC decision isn’t clear cut, meaning event risk is large for CAD

CAD strengthened by 1% against USD, and after netting off its overnight losses, the loonie closed three-quarters of a percent stronger than the day before. read more

Loonie slumps as bond spreads with the US widen ahead of BoC decision

Loonie slumps as bond spreads with the US widen ahead of BoC decision

The loonie fell half a percent on Monday despite strength in equities. The move appears to be driven mostly by rates and oil. read more

Loonie rally faces a big challenge in the form of the BoC

Loonie rally faces a big challenge in the form of the BoC

The Canadian dollar surged 0.88% higher on Friday as US equities soared and yield spreads with the US narrowed. read more

Week Ahead: Real rates to remain at the wheel for G10 FX next week

Week Ahead: Real rates to remain at the wheel for G10 FX next week

Next week, real rates will remain in focus along as fresh policy decisions are expected from the Bank of Canada, European Central Bank, and others. read more

Loonie can’t make inroads despite more hawkish BoC expectations

Loonie can’t make inroads despite more hawkish BoC expectations

The loonie struggled to consolidate earlier gains as sentiment in the equity market shifted due to pressure from higher US rates. read more

Loonie struggles to make ground despite rising risk of 75bps

Loonie struggles to make ground despite rising risk of 75bps

Yesterday’s CPI release unequivocally rose the prospect of the Bank of Canada hiking rates by 75bps at next week’s meeting. read more

Inflation beats expectations, but doesn’t quite shout 75bps next week

Inflation beats expectations, but doesn’t quite shout 75bps next week

Headline inflation in Canada beat expectations by two tenths of a percent in September, printing at 6.9% year-on-year. read more

September’s CPI could put CAD under more pressure today

September’s CPI could put CAD under more pressure today

Today, all eyes are on September’s CPI report at 13:30 BST after recent data have seen inflation pressures starting to moderate in Canada. read more

Loonie joins the risk-on rally but this may be temporary

Loonie joins the risk-on rally but this may be temporary

The loonie posted a strong rally yesterday, appreciating 1.14% and more than erasing last Friday’s losses. read more

Canadian business survey suggests further disinflation is in the pipeline

Canadian business survey suggests further disinflation is in the pipeline

The BoC's Business Outlook Survey leaves two key takeaways: inflation pressures will continue to ease, but the economic outlook looks more pessimistic. read more

Hunting for fiscal consolidation

Hunting for fiscal consolidation

Newly appointed Chancellor Jeremy Hunt today announced plans to raise a further estimated £32bn in tax revenue relative to the mini-budget projections. read more

Loonie rallies with equities into the release of the Q3 Business Outlook Survey

Loonie rallies with equities into the release of the Q3 Business Outlook Survey

Today, CAD price action may take a more local perspective as the Bank of Canada’s Q3 Business Outlook Survey is released. read more

Week Ahead: Will the gilt market behave?

Week Ahead: Will the gilt market behave?

Next week, the data calendar thins out further before central banks come back online with rate decisions from Europe and Canada the week after. read more

Loonie gives traders whiplash following US CPI

Loonie gives traders whiplash following US CPI

Yesterday, the loonie traded in a jaw-dropping 270-pip range following the US CPI beat and subsequent equity-led reversal in risk sentiment. read more

No slowdown in sight: another hot core inflation print melts markets

No slowdown in sight: another hot core inflation print melts markets

After the September NFP report announced the death of the Fed pivot, today’s inflation report put the nail in the coffin and poured cement over the top. read more

USDCAD could hit 1.40 in event of hot US CPI report

USDCAD could hit 1.40 in event of hot US CPI report

In the event of a strong CPI print today, which send equities hurtling lower, we anticipate that USDCAD could rally 1.3% to May 2020 highs. read more

Loonie drops as bond markets brace for another tumultuous day

Loonie drops as bond markets brace for another tumultuous day

After rallying on the initial downturn in US rates, the loonie quickly reversed course as markets shifted to a risk-off tone following the sharp drop in the pound. read more

CAD traders return from Thanksgiving to a weaker loonie

CAD traders return from Thanksgiving to a weaker loonie

With US markets reopening today, and hawkish positioning for tomorrow’s US CPI release, further upside in the USDCAD pair is likely. read more

CAD performance this week hinges on broader risk appetite

CAD performance this week hinges on broader risk appetite

This week, most of the focus will be on the tone of risk within the cross-asset space and US rate expectations following Wednesday’s inflation report. read more

Week Ahead: All eyes on core CPI following payrolls

Week Ahead: All eyes on core CPI following payrolls

After a tumultuous September, the topic that has dominated most discussions in the first week of October was whether the Fed was going to pivot or not. read more

The Fed pivot isn’t on just yet

The Fed pivot isn’t on just yet

The market discourse this week has centred on whether we’ve reached the peak level of hawkishness from the Fed. read more

Macklem’s comments fail to prompt a CAD rally

Macklem’s comments fail to prompt a CAD rally

Yesterday’s speech by BoC Governor Macklem was the main event for Canadian investors, but his hawkish comments had a very muted impact on the loonie. read more

CAD losses limited by resilient equities and OPEC+ decision

CAD losses limited by resilient equities and OPEC+ decision

Despite a substantial retracement in the broad US dollar in yesterday’s session, the loonie sat firmly in the middle of the G10 pack. read more

USDCAD likely to grind higher as OPEC underdeliver

USDCAD likely to grind higher as OPEC underdeliver

The question for CAD bulls as the loonie trades 0.2% lower this morning will be how supportive is the production cut decision by OPEC+ going to be. read more

Monex’s October 2022 FX Forecasts

Monex’s October 2022 FX Forecasts

Although a high level of bond market volatility is filtering through to FX markets our analysts believe the dollar has a structural basis to grind higher in Q4. read more

Loonie climbs from multi-year lows as oil and risk environment provide a boost

Loonie climbs from multi-year lows as oil and risk environment provide a boost

The loonie’s feel-good factor has extended into today’s session, as equity futures continue to rally and the momentum in oil remains higher. read more

Loonie rallies as OPEC+ seen cutting production

Loonie rallies as OPEC+ seen cutting production

The loonie has joined AUD in outperforming the broad G10 move this morning, on news that OPEC+ are seeking to cut production by more than 1m barrels per day. read more

Week Ahead: Volatile conditions to persist as investors reposition

Week Ahead: Volatile conditions to persist as investors reposition

FX markets were incredibly volatile this week, with the main source of volatility came from events in the UK, seeing the pound fall to an all-time low. read more

Loonie underperforms as equities tank

Loonie underperforms as equities tank

Today, focus will rest heavily on the performance of North American equities after a 2% slide in the S&P 500 was recorded yesterday. read more

USDCAD levels are highly dependent on Treasury yields 

USDCAD levels are highly dependent on Treasury yields 

The loonie rallied by 0.9% on Wednesday on the brief return of risk appetite following UK developments and a rally in crude. read more

USDCAD makes a fresh high as UK developments induce more risk aversion globally

USDCAD makes a fresh high as UK developments induce more risk aversion globally

The loonie managed to eke out a tiny gain against the greenback, making it one of the stronger performers in the G10. read more

USDCAD makes a fresh high as UK developments induce more risk aversion globally

USDCAD makes a fresh high as UK developments induce more risk aversion globally

Today’s data calendar is empty on the Canadian side, but high volatility in correlated markets is likely to keep the loonie on its toes. read more

USDCAD climbs above 1.36 as pressure from Treasury yields remains

USDCAD climbs above 1.36 as pressure from Treasury yields remains

From the core message delivered by Chair Powell, we expect the momentum of higher front-end Treasury yields and upside in USDCAD to persist this week. read more

Week Ahead: Fire sale in markets may not ease despite thinner data calendar

Week Ahead: Fire sale in markets may not ease despite thinner data calendar

In the week ahead, the economic calendar dies down slightly, although the start to the week might not be frictionless as traders return with the results of Italy’s latest election. read more

The not so “mini” UK budget

The not so “mini” UK budget

At today’s mini-budget, newly appointed Chancellor Kwasi Kwarteng announced a substantial easing of fiscal policy that awoke the bond vigilantes and sent the gilt curve substantially higher, led by the front-end. read more

USDCAD rallies to 26-month high on widening rate differentials

USDCAD rallies to 26-month high on widening rate differentials

With little on the data calendar to come to the loonie’s rescue, widening yield differentials and pressure on North American equity benchmarks will likely keep upward momentum unimpaired in the short-term.  read more

Bank of England delivers hawkish 50bp increase

Bank of England delivers hawkish 50bp increase

The Bank of England today voted 5-4 in favour of raising Bank Rate by 50bps to 2.25%. In response to today’s BoE decision, the pound tracked near-term money market pricing lower as GBPUSD erased its pre-BoE rally. read more

Loonie gets hit by Fed overtaking the BoC

Loonie gets hit by Fed overtaking the BoC

The Canadian dollar has been on quite the downswing ever since last Tuesday, when the last US CPI report was released. After yesterday’s incredibly hawkish Federal Reserve meeting, the loonie fell once again as Canadian yields struggle to keep pace with quickly rising US yields. read more

Fed turns incredibly hawkish, so much so that markets questioned its intentions

Fed turns incredibly hawkish, so much so that markets questioned its intentions

The Federal Reserve today hiked interest rates by 75 basis points, raising the target range to 3-3.25%. Given the decision largely fell in line with expectations, the initial market reaction was focused on the accompanying economic projections. read more

Loonie feels the pinch from widening rate differentials

Loonie feels the pinch from widening rate differentials

The Canadian dollar broke to a new cycle low yesterday, the weakest level seen since September 2020, 24 months ago. This followed an optimistic CPI report that showed broad-based signs of slowing price growth. read more

Loonie slips on broad-based moderation in inflation pressures

Loonie slips on broad-based moderation in inflation pressures

Inflation in Canada cooled more quickly than expected in August, with the headline index down -0.3% on the month and falling in year-on-year terms by 0.6 percentage points to 7.0%. This marks the second consecutive monthly decline in the headline YoY figure from June’s peak of 8.1%, and similarly to July, was mostly driven by lower gasoline prices and base effects. Analysts expected a milder monthly decline of 0.1% for the MoM rate and 0.3 percentage points for the YoY figure. Many signs in the report will be viewed with optimism by the Bank of Canada. The headline inflation rate sits a full percentage point below their 8.0% YoY forecast for the third quarter. In addition, core price pressures, which have been in particular focus given their stickiness, also seemed to stall. CPI excluding food and energy came in flat in August, allowing base effects to cut the YoY figure by three tenths to 5.3%. Out of the BoC’s three preferred measures of core, both core-median (+4.8% YoY) and core-trim (+5.2% YoY)  fell by two tenths. Only core-common (+5.7%), which is based upon a complex econometric factor model as opposed to simple statistical rules, went the other way. Nevertheless, most analysts have been putting very little weight on the core-common rate in recent months as it has been subject to large revisions of late; as a testament to that fact, the indicator’s reading for July was revised upward by five tenths to 6.0%, which is a dramatic revision. Aside from the softening in core prices, a few other key signals in the report will allow Bank of Canada officials to momentarily catch their collective breath. For one, price growth for both goods (-0.8% MoM) and services (+0.1% MoM) slowed, suggesting that an easing in elevated supply chain pressures, weaker domestic demand, and tighter monetary policy are all working in sync to slow inflation. Although the bulk of the decline in inflation was driven by lower transportation costs (-2.5% MoM) on cheaper gas (-9.6% MoM), which is heavily exposed to global conditions, some of the most interest-rate sensitive components, such as durable goods (-0.6% MoM) and shelter (-0.1%) saw prices fall, indicating that the quick pace of interest rate hikes is having its desired effect. The evidence suggests that demand is slowing, as discretionary services pertaining to travel were a major driver of the slowing in services inflation overall. Finally, the report also showed that inflation dipped in every single Canadian province, which was yet another sign of a broad-based slowdown in price growth. Following the release of the data, Canadian markets reacted in a slightly dovish manner, consistent with the idea that a faster-than-expected return to the 2% target removes some of the tail risk that the Bank of Canada will need to tighten policy well beyond the 4% handle. In accordance with that notion, bond yields fell by 7-9bps across the curve from moments prior to the report’s release, flipping the overall 1-day change from positive to negative and widening the discount on Canadian government bond yields relative to US treasuries. In money markets, expectations for the Bank of Canada’s next meeting in October fell from a fully priced 50bp hike and a 22% chance of 75bps to a fully priced 25bp move with 90% chance of 50bps. As a result, the loonie sold off, with USDCAD pushing half a cent higher and edging closer to yesterday’s 22-month high for the pair. Falling transportation costs drive the bulk of the slowdown in headline price pressures     Author:  Jay Zhao-Murray, FX Market Analyst   Disclaimer This information has been prepared by Monex Canada Inc., an execution-only service provider. The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice on which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. No opinion given in the material constitutes a recommendation by Monex Canada Inc., or the author that any particular transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, it is not subject to any prohibition on dealing ahead of the dissemination of investment research and as such is considered to be a marketing communication. read more

Loonie retraces on bid in equities, but rally could prove brief

Loonie retraces on bid in equities, but rally could prove brief

The Canadian dollar continued to trade near lows not seen in 22 months yesterday as pressure remained on the loonie from both rising US rates and the decline in crude oil prices. On deck today we have a Canadian CPI report for August at 13:30 BST / 08:30 EST. read more

Week Ahead: Deluge of central bank decisions populate next week’s calendar

Week Ahead: Deluge of central bank decisions populate next week’s calendar

In the week ahead, the data calendar is dominated by a torrent of interest rate decisions as nine major central banks prepare to adjust their monetary policy. The main event, however, will be Wednesday’s Federal Reserve decision. read more

USDCAD breaks out of 22-month range to the upside

USDCAD breaks out of 22-month range to the upside

Rate differentials continued to extend in favour of the US dollar in yesterday’s session, with the 2-year Treasury yield climbing to fresh highs of 3.871%, 5 basis points higher than the Canadian equivalent. read more

USDCAD is back trading at the top of its 22-month range

USDCAD is back trading at the top of its 22-month range

With the data calendar sitting on the lighter side yet again today, we expect price action in the loonie to be uninspiring as traders await fresh pushback from the BoC to tip the balance of front-end yield differentials back in favour of CAD.  read more

Canadian dollar slides with risk appetite

Canadian dollar slides with risk appetite

In line with the broader cross-asset risk-off move, the Canadian dollar fell 1.5% yesterday on the US CPI-led change in Federal Reserve expectations. read more

August inflation eases pressure on BoE to raise 75bps

August inflation eases pressure on BoE to raise 75bps

Headline inflation eased from July’s reading of 10.1% YoY to 9.9% in August. This sees the headline inflation rate fall back to levels that are in line with the Bank of England’s Q3 projections. read more

Core CPI heats up, cementing the case for 75bps from the Fed next week

Core CPI heats up, cementing the case for 75bps from the Fed next week

Both headline and core US CPI were hotter than expected in August, leading markets to embark on a swift reversal from recent price action. read more

Markets continue to fade the dollar ahead of key US CPI report

Markets continue to fade the dollar ahead of key US CPI report

Yesterday’s dollar price action was primarily driven by cross-asset correlations, as global risk sentiment was decisively positive, as equities rallied. read more

UK labour market tightens further, but won’t tip the balance within the MPC

UK labour market tightens further, but won’t tip the balance within the MPC

July’s labour market data out of the UK this morning showed the 3-month unemployment rate continued to tick down. read more

Loonie continues to recover as equities remain supported

Loonie continues to recover as equities remain supported

Risk sentiment remains the primary driver of the USDCAD pair. Despite oil gapping lower last week, the loonie has taken its cues from US equity indices. read more

Week Ahead: Delayed BoE puts all the emphasis on US CPI next week

Week Ahead: Delayed BoE puts all the emphasis on US CPI next week

In the Week Ahead (12th-16th September), with the Bank of England meeting moved to accommodate a period of national mourning, the emphasis will rest on US CPI data on Tuesday. read more

Canada lost 40k jobs in August, but wages grew quickly

Canada lost 40k jobs in August, but wages grew quickly

The Canadian economy shed -39,700 jobs in August, accelerating the pace of employment decline from July, which saw -30,600 jobs lost. It was a substantial miss relative to expectations, as the median estimate was for a +15k gain and the most bearish analyst predicted just a -20.5k decline. read more

Loonie spurred higher by renewed risk bid

Loonie spurred higher by renewed risk bid

This morning, the Canadian dollar has joined the G10 rally as equity futures trade in the green and the dollar is put under broad-based pressure. read more

The hawks rule the roost as the ECB hikes 75bps

The hawks rule the roost as the ECB hikes 75bps

The ECB raised its three key interest rates by 75bps today: to 0.75% - Deposit Rate, 1.25% - Main Refinancing Rate, and 1.5% - Marginal Lending Rate. read more

Loonie finds very little support in the BoC’s decision

Loonie finds very little support in the BoC’s decision

The Bank signalled that future rate increases are yet to come, but given that today’s decision already marks a downshift from July’s 100bp hike. read more

Bank of Canada takes interest rates into restrictive territory with 75bp hike

Bank of Canada takes interest rates into restrictive territory with 75bp hike

The BoC raised its policy interest rate by 75bps to 3.25% on Wednesday, and the overnight target rate finally exceeds its estimated 2 to 3% “neutral” range. read more

Bank of Canada set to hike 75bps, but risks remain

Bank of Canada set to hike 75bps, but risks remain

The Bank of Canada is set to meet today, with consensus looking for a 75 basis point hike. However, risks of a smaller 50bp move remain. read more

Loonie opens higher after risk sentiment is restored

Loonie opens higher after risk sentiment is restored

Today, with oil tracking back towards $90 per barrel, the loonie has reversed yesterday’s marginal losses as it sits 0.2% higher in early trading.  read more

Loonie retraces Friday’s gains despite domestic market closures

Loonie retraces Friday’s gains despite domestic market closures

While domestic markets are closed for Labor Day today, price action in CAD is unlikely to be muted as events in Europe has soured global risk sentiment. read more

Week Ahead: The end of summer ushers in a fuller economic data calendar

Week Ahead: The end of summer ushers in a fuller economic data calendar

Next week has been graciously set up by markets over the past few days as September marks the reintroduction of the central bank calendar. read more

August’s payrolls data doesn’t close the debate on September’s meeting

August’s payrolls data doesn’t close the debate on September’s meeting

August’s Nonfarm Payrolls report showed the US economy added 315,000 jobs in August, a marginal beat on Bloomberg’s survey of economist expectations. read more

Loonie remains under pressure ahead of next week’s BoC

Loonie remains under pressure ahead of next week’s BoC

The key domestic risk event is the Bank of Canada’s interest rate decision next Wednesday, where we believe rates will be raised a further 75bps. read more

Monex’s September 2022 FX Forecasts

Monex’s September 2022 FX Forecasts

Our forecasts are more bullish on the dollar as we no longer expect the Fed’s downshift to 50bps in September to be as supportive for risk conditions. read more

USDCAD continues to rally as market risk conditions deteriorate

USDCAD continues to rally as market risk conditions deteriorate

Yesterday was fairly uneventful for the Canadian dollar, as it traded in a 78-tick range, or less than 1 cent USD, weakening by 0.3% against the greenback. read more

Hawkish BoC pricing does little to shelter CAD

Hawkish BoC pricing does little to shelter CAD

Given CAD’s sensitivity to global risk conditions, traders will continue to monitor how equity benchmarks trade ahead of Friday’s US jobs data. read more

Monex’s August 2022 FX Forecasts

Monex’s August 2022 FX Forecasts

DXY index is likely to stay supported, owing to our expectation that the euro-area’s growth outlook will force another run on parity this month. read more

Monex’s July 2022 FX Forecasts

Monex’s July 2022 FX Forecasts

Read Monex's July 2022 FX Forecasts. Find our what our top forecasters expect for currency markets, amid ongoing recession concerns and higher inflation. read more

Spooked by services inflation, the BoE doves fall back in line

Spooked by services inflation, the BoE doves fall back in line

The Bank of England voted 6-3 in favour of raising rates by 25bps to 1.25%. The dissenters (Haskell, Mann, and Saunders) all voted to hike rates by 50bps, in order to mitigate against risks that wage growth, firms’ pricing decisions, and inflation expectations fuel persistence in above-target inflation. read more

Loonie under pressure as interest rate differentials narrow

Loonie under pressure as interest rate differentials narrow

The loonie depreciated on Friday despite a strong job market print that put more pressure on the Bank of Canada to expeditiously raise its policy interest rate. Amid this backdrop, the loonie continues to trade weaker, with losses likely to be extended should North American equity performance deteriorate further after markets cash open. read more

Monex’s June 2022 FX Forecasts

Monex’s June 2022 FX Forecasts

Read Monex's June 2022 FX Forecasts. Find our what our top forecasters expect for currency markets, amid ongoing global growth and inflation concerns. read more

Monex’s May 2022 FX Forecasts

Monex’s May 2022 FX Forecasts

Read Monex's May 2022 FX Forecasts. Find our what our top forecasters expect for currency markets, amid current geopolitical events and uncertain conditions. read more

CAD Outlook: Loonie strength to continue in Q2 on higher oil and BoC support

CAD Outlook: Loonie strength to continue in Q2 on higher oil and BoC support

The Canadian dollar has been highly sensitive to monetary policy actions and price action in global commodities over the course of Q1. Under our base case for commodities and the Bank of Canada in Q2, which envisages two 50bp hikes, we believe gains in the Canadian dollar are likely to continue. However, our flatter forecast for the BoC policy rate in H2 will likely weigh on the loonie at the margin as the pace of Fed tightening overtakes that of the Bank of Canada. read more

Monex’s April 2022 FX Forecasts

Monex’s April 2022 FX Forecasts

While the limited progress in peace talks towards the end of the month blurred the overall dollar dynamics due to a positive boost to regional risk sentiment, we still expect some of the dominant drivers of FX markets from March to remain in play in April. read more

Russia-Ukraine makes central banks think twice about hikes

Russia-Ukraine makes central banks think twice about hikes

Risk sentiment chopped and changed throughout the week as all eyes remained on Russia-Ukraine developments. This week monetary policy decisions by the FOMC and BoE are set to show similar levels of caution to the ECB, although both central banks are still expected to hike interest rates by 25bps. read more

Loonie set to limit weekly losses as energy producer stocks rise

Loonie set to limit weekly losses as energy producer stocks rise

Today, at 13:30 GMT, markets will get an update on the status of the Canadian labour market, which by all accounts is expected to show employment rose by 127.5k. The data is likely to confirm expectations of continued policy tightening by the BoC if the data prints in line with expectations. read more

Euro jolts above 1.11 as ECB surprises markets with hawkish move despite war in Ukraine

Euro jolts above 1.11 as ECB surprises markets with hawkish move despite war in Ukraine

Today’s European Central Bank decision came as music to the ears of EUR bulls. With the Russian invasion of Ukraine having materially changed the eurozone risk profile in a matter of weeks, the last thing markets expected was for the ECB - which is usually very cautious around its wording - to come out with a definitive announcement of a faster taper to their QE programme. read more

US inflation highest since January 1982, but markets unfazed

US inflation highest since January 1982, but markets unfazed

US headline inflation today printed at 7.9% YoY for February, up from 7.5% in January, to record the fastest pace of price growth in 40 years. Unlike in previous readings, however, the core reading was much more muted at just 0.5% MoM. read more

Loonie rallies off of market optimism despite sharp drop in oil

Loonie rallies off of market optimism despite sharp drop in oil

The loonie rose half a percent against the greenback on Wednesday, following a market-wide positive shift in risk sentiment. Nevertheless, CAD’s gains lagged many of its peer currencies in the G10 space, owing potentially to the limited sell-off in the loonie during risk-off periods over previous weeks. read more

EUR Update: European currencies battered by latest Russia-Ukraine headlines – is there a floor?

EUR Update: European currencies battered by latest Russia-Ukraine headlines – is there a floor?

Since the publication of our latest FX forecasts at the beginning of the month, significant developments in the Russia-Ukraine war have put increased pressure on European currencies and equities. Over the last month, the respective currencies of these nations have therefore performed even worse than the euro. The question now is; where will price action stabilise? read more

Monex’s March 2022 FX Forecasts

Monex’s March 2022 FX Forecasts

Geopolitical events are likely to continue driving FX markets in the near-term and with no clear end game as things stand, our forecasts remain under review. Our base case scenario at present is that the pace of geopolitical developments slow in March, but recent events result in a material deterioration in Europe’s macroeconomic backdrop and a still tentative risk environment. read more

EUR Update: Fluid backdrop to keep volatility elevated

EUR Update: Fluid backdrop to keep volatility elevated

The ongoing political risk in Europe means EURUSD is going to remain an easy target within the G10, while rising US Treasury yields the euro’s sensitivity to them will also be a risk. Looking over to H2, an improvement in global growth conditions will be more deterministic for the euro when the monetary outlook and political backdrop has become more stable. read more

USDCAD lower, but loonie lags peers as crude slips

USDCAD lower, but loonie lags peers as crude slips

Yesterday’s session saw the Canadian dollar advancing against USD, however it underperformed against other higher beta currencies as falling crude oil prices weighed on the petro-linked currency. Today’s focus will be on a speech by Bank of Canada Governor Tiff Macklem, as the BoC is expected to raise rates in March. read more

Weak Canadian jobs report unlikely to derail BoC tightening

Weak Canadian jobs report unlikely to derail BoC tightening

An underwhelming jobs report from Canada coupled with a robust report from the US led to a spike in USDCAD on Friday. Most of the loonie’s losses have been recuperated, however, arguably as the jobs report failed to shift expectations for Bank of Canada policy tightening: read more

Monex’s February 2022 FX Forecasts

Monex’s February 2022 FX Forecasts

Looking ahead, our FX analysts expect the dollar’s strength to be more nuanced in February and for it to be isolated against currencies where rates are likely to lag the rise in US rates. In our forecasts, this largely pertains to EUR, JPY and CNY. read more

BoC underdelivers but it took Fed Powell to force the sell-off in the loonie

BoC underdelivers but it took Fed Powell to force the sell-off in the loonie

Following the BoC’s announcement that rates are set to remain at 0.25%, the loonie reversed all of its daily gains to sit flat despite the Bank teeing up a rate hike at March’s meeting. While the Canadian dollar flirted with trading higher, such that half of its lost gains were recovered, during the press conference, the loonie’s bullish bias was soon to be crushed come the Fed meeting. read more

Loonie slides as commodity currencies lead losses vs USD

Loonie slides as commodity currencies lead losses vs USD

Traders exposed to commodity currencies such as CAD will be keeping a close eye on geopolitical developments this week, while CAD traders specifically will be focusing on the BoC this Wednesday and its updated monetary policy report. read more

BRL Outlook: Hawkish BCB to offset depreciation, but political risks may tip the balance

BRL Outlook: Hawkish BCB to offset depreciation, but political risks may tip the balance

As the year progresses, the Brazilian general elections that are set to be held in October will become increasingly relevant for FX markets given the real’s reputation of weakening in times of political uncertainty and upcoming elections. read more

USD Outlook: Factoring in the stall in hawkish Fed pricing

USD Outlook: Factoring in the stall in hawkish Fed pricing

Since the Federal Reserve’s December meeting, the DXY index has fallen by 1.5% despite data released over the same timeframe for December showing the unemployment rate falling below 4% and inflation data rising to a near 40-year high. read more

UK economy finally recovers to above pre-pandemic levels of output

UK economy finally recovers to above pre-pandemic levels of output

Today's release of UK GDP data for November saw economic activity more than double the consensus estimate with a print of 0.9% MoM. In addition to this, October’s monthly GDP reading was revised upwards from 0.1% to 0.2%. read more

Monex’s 12 key market themes for 2022

Monex’s 12 key market themes for 2022

Trade ideas tend to have a short shelflife in today's market, so instead of issuing trade suggestions for 2022, we have opted to outline the main themes we think will dominate market price action in the coming 12 months. read more

US inflation near 40-year high, but financial markets are underwhelmed

US inflation near 40-year high, but financial markets are underwhelmed

Despite the US CPI release showed that headline inflation is sitting at its highest point since June 1982, the reaction in the Treasury market was counterintuitive and the dollar sold-off against its G10 peers. read more

US and Canadian labour market reactive

US and Canadian labour market reactive

Expectations for today’s US payrolls data were high after multiple sell-side forecasters revised their projections for the net employment figure upwards following the higher ADP and Homebase data from earlier in the week. read more

FOMC meeting minutes strike hawkish tone, but it’s one for the fixed income traders

FOMC meeting minutes strike hawkish tone, but it’s one for the fixed income traders

It seems today's FOMC meeting minutes is one for the fixed income traders as opposed to the FX space. For FX markets, the impact of today’s meeting minutes will likely play out over the course of the week, especially as December’s jobs data is released on Friday following bumper ADP and Homebase indicators earlier in the week. read more

Loonie shielded by stronger crude prices ahead of OPEC+ meeting

Loonie shielded by stronger crude prices ahead of OPEC+ meeting

Today’s OPEC+ meeting will be crucial to watch for commodity watchers and CAD traders, especially in light of the damaged pipeline situation in Libya. Markets expect the cartel to stick to existing policy in today’s meeting, which means output is set to be hiked by another 400,000 barrels a day from the start of February. read more

Monex January 2022 FX Forecasts

Monex January 2022 FX Forecasts

Looking ahead to 2022, our forecasts have been adjusted to take into account the new sensitivities of central banks to inflation, continuing virus risks and the likely slowdown in growth in Q1. Omicron risk continues to dominate as policymakers conduct a balancing act in order to mitigate the health and economic impacts. read more

Loonie looks to stabilise at the low 1.28’s as liquidity dries up for Christmas

Loonie looks to stabilise at the low 1.28’s as liquidity dries up for Christmas

The dollar weakened further across the board in yesterday’s session as the risk-on mood in markets extended following more optimistic Covid headlines while equities surged, with the S&P 500 hitting another all-time high. read more

Loonie traders turn to October GDP for final data release of the year

Loonie traders turn to October GDP for final data release of the year

Before the data calendar empties until the new year, market participants can expect the release of Canada's October’s GDP data which is released at 13:30 GMT. read more

Markets start to dull down as data calendar dries up

Markets start to dull down as data calendar dries up

For the Canadian dollar today, focus will be on EIA US oil inventories data which will be released at 15:30 GMT before tomorrow’s release of October’s GDP finishes off the data calendar for the year.  read more

Loonie hits one-year low yesterday as market sentiment crumbles

Loonie hits one-year low yesterday as market sentiment crumbles

With concerns over the global health backdrop weighing on risk sentiment across markets yesterday, the loonie continued to be offered against the US dollar as markets sought security from the potential slowdown in economic activity. read more

Loonie falls after the BoC renews its inflation mandate with a twist

Loonie falls after the BoC renews its inflation mandate with a twist

CAD was under pressure for most of yesterday’s session as the fall in oil amid a risk-off market resulted in commodity currencies selling off across the board. The loonie also faced its own challenge as the Bank of Canada released the details of its inflation framework review. read more

Bank of Canada formalises its implicit employment goal in new inflation mandate

Bank of Canada formalises its implicit employment goal in new inflation mandate

While today’s announcement falls in line with what economists were largely expecting and is merely a formalisation of the mandate that has been in practice since the onset of the pandemic, it is being viewed as a marginal dovish development by markets. read more

Omicroncerns clouding the monetary outlook ahead of year end

Omicroncerns clouding the monetary outlook ahead of year end

Next week’s (13th - 17th December) calendar includes nine central banks scheduled to announce their policy decisions, which means FX volatility is likely to pick up. All of which are likely to be clouded by concerns over the impact of the Omicron variant. read more

Loonie traders turn to Gravelle’s economic assessment 

Loonie traders turn to Gravelle’s economic assessment 

For today, the emphasis is on Deputy Gravelle’s economic assessment for further guidance on the economic outlook at 18:00 GMT, especially as yesterday’s meeting came without a press conference.  read more

Tight labour market brings focus back to Bank of Canada

Tight labour market brings focus back to Bank of Canada

The rapid tightening of the labour market in Canada could see the Bank of Canada turn more hawkish in the year to come, especially if wages continue to rise sharply along with inflation. read more

BoC and NBP to keep markets busy ahead of US CPI

BoC and NBP to keep markets busy ahead of US CPI

Next week’s (6th - 10th November) calendar includes a BoC meeting and an NBP meeting, along with several CPI releases including the US. While the BoC is expected to hold fire on Wednesday, Thursday’s speech from BoC Deputy Governor Gravelle will be heavily watched. read more

Monex December 2021 FX Forecasts

Monex December 2021 FX Forecasts

The Omicron variant has certainly thrown another spanner in the works for our currency forecasts. With little information known about the efficacy rate of vaccines against the Omicron variant and therefore the impact it will have on global growth, we project our near-term forecasts based on the scenario of no substantial deterioration in Covid conditions towards year-end. read more

Lower growth profile and rising US yields call for downgraded EUR calls

Lower growth profile and rising US yields call for downgraded EUR calls

In November, significant downside risks to our November forecasts materialised, with growth concerns and rising US yields pushing EURUSD down from 1.16 to the 1.12 level. Growth concerns arose as some eurozone countries went into light lockdowns. read more

Loonie hits 7-week low as oil markets tumble and US 2-year rises

Loonie hits 7-week low as oil markets tumble and US 2-year rises

The Canadian dollar continues to slide against its US counterpart as US equities print in the red, oil markets continue to slump on news of more strategic reserve drawdowns. read more

Projected rate paths are key for NZD and SEK

Projected rate paths are key for NZD and SEK

Next week (22nd - 26th November), focus remains on how markets price central bank tolerances to inflation and global growth conditions as Covid cases begin to rise and force major nations to impose tighter containment measures. read more

Loonie stabilises as oil pressure moderates

Loonie stabilises as oil pressure moderates

A stabilisation in oil markets yesterday helped the loonie stem its losses and stabilise around lows not seen since early October. With crude now sitting just shy of $80 per barrel again, the Canadian dollar might start retracing recent losses. read more

UK CPI, labour market data keep BoE on track for December hike

UK CPI, labour market data keep BoE on track for December hike

UK CPI massively outstripped expectations to print at its highest 12-month rate since December 2011, and the month-on-month change saw the pace of price increases reach a high not seen since April 1993. While today’s data exceeded the consensus estimate from economists, it is broadly in line with the BoE’s projections, which envisage CPI peaking at 5% in April 2022 when Ofgem adjusts its price cap again. read more

Loonie recovers from Friday’s lows despite lower oil prices

Loonie recovers from Friday’s lows despite lower oil prices

The loonie is crawling back against the dollar after Friday’s 1-month high in USDCAD, as moves in Treasury markets meant the dollar is trading softer this morning. The rally in CAD comes despite crude oil prices having fallen slightly after US President Joe Biden faced even more calls to tap the Strategic Petroleum Reserve in an attempt to tackle the elevated gas prices and push back against inflation expectations. read more

US CPI keeps markets volatile following the central bank bonanza

US CPI keeps markets volatile following the central bank bonanza

Next week (15th - 19th November), CPI remains top of mind as a number of nations are set to release reports highlighting above target price growth, however, we believe these releases will have less of an impact on broader markets relative to the US release this week. Additionally, central banks from South Africa and Turkey are expected to deliver fresh rate decisions.  read more

Loonie shaken by strong US CPI print and lower crude prices

Loonie shaken by strong US CPI print and lower crude prices

No one was safe from the broad USD rally in yesterday’s market following the CPI release. USDCAD rallied close to 0.5% as the CPI release reinforced expectations of earlier policy tightening by the Fed, while on the loonie’s side, softer crude oil prices following the rising dollar undermined the petro-linked currency further. read more

US inflation tracks back above 6%, placing pressure on transitory messaging 

US inflation tracks back above 6%, placing pressure on transitory messaging 

With expectations for October’s CPI print to rise from 5.4% to 5.9% YoY already in play, today’s inflation release had to be big to disrupt markets beyond what had already been priced into the Treasury curve and in the FX space during the morning session. read more

Loonie climbs on broad USD weakness, but tight ranges form again

Loonie climbs on broad USD weakness, but tight ranges form again

The loonie was no exception to the USD weakness story yesterday and climbed some 0.15% against the greenback as crude oil prices rose, while Bank of Canada Governor Macklem hit the media to reiterate his view on inflation. Macklem stated the surging inflation is transitory but not short-lived, and reassured the BoC would keep inflation under control. read more

Loonie continues to weather broad US dollar strength as BoC set to remain hawkish

Loonie continues to weather broad US dollar strength as BoC set to remain hawkish

The Canadian dollar continues to trade in a relatively subdued manner despite the broad bounce in the US dollar last week. Expectations of the Bank of Canada remaining one of the hawkish outliers in the G10 central bank space, which is generally pushing back market expectations, is helping support the loonie. read more

ECB and Fed speakers in scope after dovish retaliation

ECB and Fed speakers in scope after dovish retaliation

Next week (8th - 12th November), despite the absence of any major central bank meetings, the focus will remain on monetary policy pricing, especially as the Fed’s media blackout period ends. Notable speeches from Chicago Fed Evans and San Francisco’s Daly will be in scope for US rate traders, while opening remarks from the ECB’s Chief Economist Lane will be top of mind for euro money markets. read more

Strong payrolls keep US front-end yields firm, boosting the dollar 

Strong payrolls keep US front-end yields firm, boosting the dollar 

Amid the dovish pushback from G10 central banks this week and the broad rally in bond markets, front-end US Treasury yields have remained fairly resilient. This theme was extended in early trading today, helping the dollar gain ground ahead of October’s payroll data. While Canada’s net employment change undershot expectations by 10.4k with a print of 31.2k, today's LFS largely met our expectations. read more

Labour force survey likely to confirm the BoC’s hawkish position

Labour force survey likely to confirm the BoC’s hawkish position

With the level of employment in Canada now back to pre-pandemic levels, and the sectoral damage from lockdown limited on an employment basis, net employment gains are likely to slow. Emphasis will therefore be on signs of a tight labour market appearing in underlying metrics such as wage growth and average hours worked. read more

Bank of England bats back market expectations, sends sterling plummeting

Bank of England bats back market expectations, sends sterling plummeting

The Bank of England today shocked markets by voting 7-2 to hold rates at 0.1% while voting 6-3 to maintain the current stock of assets at £875bn. While we largely expected the Bank to hit back against aggressive market pricing of rate hikes by holding rates, we anticipated a tighter split in the vote in order to signal to markets that tighter policy was imminent at December’s meeting.  read more

Markets turn a blind eye to Fed and ECB guidance, loonie off the lows from USD weakness

Markets turn a blind eye to Fed and ECB guidance, loonie off the lows from USD weakness

After touching its lowest point since October 13th, the loonie reversed losses to close the day out on a stronger footing yesterday after the Federal Reserve underdelivered on market expectations and broad US dollar weakness rang through FX markets. Today will be another quiet session for loonie traders today ahead of Friday’s labour market data. read more

Time to taper, but that is all from the Fed for now

Time to taper, but that is all from the Fed for now

The Federal Reserve largely met the market consensus today by announcing plans to taper its QE programme by a maximum of $15bn per month until year-end. Powell opened the door further to give policymakers greater optionality going forward. read more

Loonie trades in tight ranges ahead of the Fed

Loonie trades in tight ranges ahead of the Fed

The Federal Reserve could force USDCAD to breakout to the upside given the right mix of policy tightening and commentary from Chair Powell, however, the possibility of the Fed under delivering on a hawkish message also remains a viable risk. read more

The Canadian dollar continues to grind out gains ahead of Friday’s data

The Canadian dollar continues to grind out gains ahead of Friday’s data

This morning, the Canadian dollar is seeing more notable losses against the US dollar compared to other G10 currencies, but this is likely a retracement from yesterday’s moves. Today’s calendar is sparse for Canada, with building permits being the only data release of note at 12:30 GMT ahead of the crucial FOMC meeting. read more

Loonie struggles to continue rally to 1.22, but labour market data could change this

Loonie struggles to continue rally to 1.22, but labour market data could change this

The loonie remains trading near recent highs, but broad USD buying towards month-end reversed all of last week’s gains. With oil markets looking as if they’ve stalled just north of the $80 mark recently, and equity markets pivoting on whether they post marginal gains, the loonie’s tailwinds have seemingly weakened. read more

The central bank magic trick: turning a dove into a hawk in plain sight

The central bank magic trick: turning a dove into a hawk in plain sight

Price action in G10 FX markets this week has been driven predominantly by pricing in bond markets and the actions of central banks. This dynamic is set to continue next week (1st - 5th November) as the battle against rising inflation migrates from the Bank of Canada and the ECB  to the Reserve Bank of Australia, the Federal Reserve, and the Bank of England. read more

Loonie looks to August GDP data to assess economic performance in Q3 vs the US

Loonie looks to August GDP data to assess economic performance in Q3 vs the US

Today, loonie traders will be keeping a close eye on August’s GDP data at 13:30 BST following the slip in US growth in Q3 and the Bank of Canada’s downgrade to 2021 GDP on Wednesday. The data is expected to show the economy expanded by 0.7% MoM in August, following a tentative start to the third quarter when July’s data printed at -0.1%. read more

ECB meeting: Inflation, inflation, inflation

ECB meeting: Inflation, inflation, inflation

Despite the suppressed expectations, the ECB managed to dull the event down even further by adjusting their opening statement such that it indicates the decision would not include an assessment of the economic outlook. The lack of excitement was visible across markets, as EURUSD remained unfazed after the release of the initial rate statement. read more

Not to be left out, the BoC joins the leading pack of hawks

Not to be left out, the BoC joins the leading pack of hawks

Yesterday, all eyes switched firmly to the Bank of Canada as the central bank not only finalised its QE programme by entering the reinvestment stage but also brought forward its expectation of when the output gap would close from H2 2022 to “the middle quarters of next year”. read more

Bank of Canada ends QE and emboldens hawkish market pricing 

Bank of Canada ends QE and emboldens hawkish market pricing 

The Bank of Canada today announced that it would taper its QE programme by a further C$1bn a week, therefore entering the reinvestment stage, while it also brought forward its forecast for the output gap closing from H2 2022 to “the middle quarters” of next year. read more

UK budget: Sunak saves part of the fiscal windfall with 2024 election in mind

UK budget: Sunak saves part of the fiscal windfall with 2024 election in mind

Today’s long awaited Autumn budget was a damp squib for FX markets given that the majority of the fiscal pledges were announced in advance of the formal unveiling. The net impact of today’s budget is lower bond issuance going forward, with the OBR now projecting £154bn less in borrowing over the following 5-years. read more

Loonie’s tight ranges set to be broken by key BoC meeting

Loonie’s tight ranges set to be broken by key BoC meeting

The loonies’ tight ranges are likely to be broken today as the Bank of Canada updates investors with its latest policy decision and economic outlook. While we expect larger moves in USDCAD relative to other trading sessions this week, the loonies’ slight depreciation trend may not reverse should the Bank not accompany the end to their QE programme with a more hawkish outlook for rate hikes. read more

Loonie volatility is limited ahead of the Bank of Canada meeting

Loonie volatility is limited ahead of the Bank of Canada meeting

The Canadian dollar struggled to hold onto the oil rally yesterday as it slipped at the margin against the US dollar. With very little in the way of economic data today, and the Bank of Canada scheduled tomorrow, today’s session is likely to be the calm before the storm. read more

This week’s BoC meeting could give loonie rally fresh legs

This week’s BoC meeting could give loonie rally fresh legs

The Canadian dollar starts this week on the front foot as oil markets climb to $85.50 per barrel, but the loonie remains far from last week’s highs. A hawkish Bank of Canada meeting may tip the balance in favour of the loonie, although a further taper of the QE programme to the reinvestment level of C$1bn a week is unlikely to be marked as hawkish. read more

Central banks to take centre stage ahead of crucial GDP readings

Central banks to take centre stage ahead of crucial GDP readings

A flurry of central bank meetings take will place across the globe next week (25th - 29th October), while Q3 GDP prints from the US and eurozone will take centre stage on Friday. Several countries will also release inflation readings. Among the central bank meetings are the Bank of Canada, the Bank of Japan and the European Central Bank - in order of importance. read more

Loonie weakens on oil retreating from multi-years high

Loonie weakens on oil retreating from multi-years high

With both Brent crude and WTI taking a leg lower yesterday however, while the market mood was not supporting the loonie either, USDCAD gained around half a percentage point on the day. Some of those gains have been pared back this morning, but looking at the remainder of the day any changes in FX direction should come from broader macro flow given the lack of noteworthy data releases from Canada. read more

USDCAD falls to lowest level since June following upbeat market mood

USDCAD falls to lowest level since June following upbeat market mood

The Canadian dollar continued its climb against the dollar yesterday to reach new highs not seen since July as crude oil prices ticked up higher and risk sentiment remained supportive, while this morning, the loonie climbed up further to June levels. read more

CAD continues to find support in oil rally and weaker USD 

CAD continues to find support in oil rally and weaker USD 

Today’s focus turns to CPI inflation from Canada at 13:30 BST, which will be viewed in light of next week’s policy decision. Expectations for the YoY print are set at 4.3%, slightly higher than August’s 4.1% reading, while the MoM figure is expected to remain unchanged compared to last month, non-seasonally adjusted. read more

Loonie shielded by robust oil prices while USD weakens

Loonie shielded by robust oil prices while USD weakens

The loonie was shielded by strong oil prices in yesterday’s session and managed to withstand pressure from the greenback, while the drop in oil prices during the latter part of yesterday’s session did little to dent the loonie as the US dollar weakened simultaneously and crude oil prices remain significantly high in broader terms. read more

EUR Update: Euro weighed down by near-term factors, medium-term outlook rosier

EUR Update: Euro weighed down by near-term factors, medium-term outlook rosier

While September’s losses were significant at over 2%, we expect the pressure on the euro to ease over the coming months as supply pressures mitigate, which should help to cool inflation and aid growth conditions. We expect the combination of these developments to be supportive for EURUSD. read more

CAD losses limited by strong oil prices despite cautious market mood 

CAD losses limited by strong oil prices despite cautious market mood 

At 15:30 EDT today, the Bank of Canada releases its Q3 Business Outlook ahead of the October 27 policy meeting which comes with fresh projections. Markets will take the survey as an important indicator of what to expect for next week’s meeting. read more

Economic activity and inflation data put stagflation fears to the test 

Economic activity and inflation data put stagflation fears to the test 

Next week (18th - 22nd October), the data calendar revolves around October’s preliminary PMI prints, while China’s Q3 GDP data also scans as one of the more interesting releases. The focus on activity data is likely to be heightened given growth concerns over previous weeks and the impact higher input costs are having. This is especially the case in the eurozone, UK, and China, where rising energy costs are the most pronounced. read more

USD Update: Defiant dollar in Q4

USD Update: Defiant dollar in Q4

Amid the global backdrop of lower growth and higher inflation, the dollar is likely to stay well bid in Q4. However, our latest forecasts now see the DXY index trading a percentage point lower than current spot levels and back towards highs of its previous trading range as the aggressive repricing in FX markets overextended in early October given our views on back-end US rates this year. read more

Big miss in ZEW fails to dent EURUSD as G10 yields moderate

Big miss in ZEW fails to dent EURUSD as G10 yields moderate

Today’s miss in the German ZEW data highlights how German activity is struggling to expand at the start of Q4 as current conditions are no longer improving. The current situation gauge tumbled from 31.9 in September to 21.6 in October, well below expectations of 28.5. EURUSD escaped the lack of optimism spilling into FX markets despite the big miss in today’s ZEW data, as at the same time yields in G10 markets have been moderating today after yesterday’s dramatic climb higher. read more

Macro backdrop of slower growth and rising inflation set to dominate FX markets

Macro backdrop of slower growth and rising inflation set to dominate FX markets

Next week (11th - 15th October), with a limited data calendar, markets are likely to continue focusing on the inflation backdrop and the impact it will have on growth conditions. We take a brief look at the environment in Europe this week and what it means for ECB and BoE pricing. read more

Diverging labour reports play out in North America

Diverging labour reports play out in North America

It was our expectation that today’s Canadian and US labour market reports would show a stark divergence, not only in net employment but also in underlying metrics. This ultimately played out, with the US jobs market adding 194k jobs in September compared with expectations of a 500k increase, while Canada added 157.1k jobs relative to expectations of just a 60k net employment gain. read more

Grappling with the stagflationary backdrop

Grappling with the stagflationary backdrop

Next week (27th September - 1st October), the focus shifts from policy announcements to individual central bankers. The RBA, RBNZ and NBP will have to announce their policy decisions given the latest downturn in the global economic outlook, while on the data front, US and Canadian labour market data stands out. read more

From policy announcements to central bank speakers

From policy announcements to central bank speakers

Next week (27th September - 1st October), the focus quickly shifts from policy announcements to individual central bankers as a swathe of speakers fill the economic calendar, largely due to the ECB’s forum on central banking taking place between the 28th and 29th of September. Rather than being in Sintra (Portugal) as has been customary, the event will take place online. read more

Bank of England delivers hawkish surprise, even by the markets standard

Bank of England delivers hawkish surprise, even by the markets standard

The Bank of England today voted unanimously to keep the Bank Rate at 0.1%, while members voted 7-2 in favour of continuing with its existing QE programme. The shift in the QE vote, from 7-1 to 7-2 due to Ramsden joining Saunders in dissenting, set the tone for what was to be a hawkish set of meeting minutes despite their Q3 GDP projection being downgraded by around a percentage point. read more

Fed signals faster tapering in 2023 but under-delivers on next year’s dot plot

Fed signals faster tapering in 2023 but under-delivers on next year’s dot plot

For those looking for an explosive Fed meeting, they may have initially been disappointed by the alterations in the dot plot. However, Powell’s comments meant volatility wasn’t absent in the FX space, with the likes of EURUSD swinging within a 0.55% range and USDJPY climbing over half a per cent higher on the day.  read more

Central bank bonanza

Central bank bonanza

The 20th - 24th September is packed with central bank meetings, with the FOMC’s decision on Wednesday eyed as the most important economic event by markets. On top of that, the Bank of England is set to release their latest policy decision, while the Norges Bank is expected to be the first G10 central bank to raise rates since the pandemic. read more

Inflation to sit top of mind next week

Inflation to sit top of mind next week

Next week’s data calendar focuses heavily on inflation data in major developed market economies, while core CPI readings from Poland and inflation expectations data in Turkey will be viewed amid historically high CPI readings. read more

Central banks set to stretch hawkish wings 

Central banks set to stretch hawkish wings 

Next week, price action in US fixed income markets will continue to garner a lot of market attention, while increasingly hawkish central bank developments will also be in scope. Of note is the Reserve Bank of Australia, who we expect to press on with tapering their QE programme, the Bank of Russia who are expected to hike by 50bps, the National Bank of Poland who will battle with record high inflation, and the European Central Bank. read more

Focus shifts from Jackson Hole to US jobs data

Focus shifts from Jackson Hole to US jobs data

In the week beginning Monday 30th August, the market’s emphasis shifts to monitoring the severity of the latest Covid-19 waves driven by the delta variant, the economic impact they are having via timely data points, and August’s Nonfarm Payrolls data next week. Fixed income and money markets will be taking their cues from the latest payroll data in order to price expectations of September’s Fed meeting. read more

Jackson Hole arrives after a volatile week for macro conditions

Jackson Hole arrives after a volatile week for macro conditions

With a tentative macroeconomic backdrop, next week’s data is likely to have a larger market impact than usual, especially with the quantity of preliminary PMI releases for August. The Fed’s annual Jackson Hole symposium should provide markets with a bit more clarity as to its tapering timeline. read more

One week closer to Jackson Hole

One week closer to Jackson Hole

Markets are likely to settle somewhat as they await the headlines from the Jackson Hole symposium on August 27th. Next week’s calendar suggests there may be pockets of isolated volatility with policy decisions from both the Reserve Bank of New Zealand and the Norges Bank, while the Reserve Bank of Australia and Federal Reserve both publish meeting minutes. read more

To hike or not to hike, that is the question

To hike or not to hike, that is the question

Markets this week have largely focused on underlying growth conditions, FOMC speakers and Friday’s labour market data, with US bond markets sending conflicting signals to FX traders. Next week (9th – 13th August), the key pieces of data centre around rate decisions from Banxico and the CBRT, both of which have reasons to hike rates due to rising inflation but also have grounds to stay pat.  read more

Canadian employment underperforms, but it isn’t all bad

Canadian employment underperforms, but it isn’t all bad

July’s employment data out of Canada saw the economy add 94,000 jobs. While on the surface, the slip looks seismic, the nature of the job additions and the stage in which the Canadian labour market recovery is at means the underperformance of the net employment data isn’t as concerning as the headline suggests. read more

Bank of England in focus after inflation overshoots and labour market progress   

Bank of England in focus after inflation overshoots and labour market progress  

Next week, the focus will be on the Bank of England to announce its policy decision and comment on the recent inflation overshoots and recovery in the labour market. read more

Q2 GDP data and the Fed are in focus amid a global third wave

Q2 GDP data and the Fed are in focus amid a global third wave

Markets will pay close attention to commentary by Chair Powell and the Fed’s assessment of current conditions. A first glance at economic performance in advanced economies in Q2 is also pinned for the week, although growing fears over the coming months might cloud the impact positive GDP figures have on markets. read more

ECB guidance to take centre stage next week, CBR set to hike rates

ECB guidance to take centre stage next week, CBR set to hike rates

The ECB takes centre stage next week, with a revamped strategy review setting the tone for a persistently more dovish course of action in the months to come, while the CBR is set to hike rates further amid a light data calendar. read more

Central banks in focus next week after Fed’s hawkish shift

Central banks in focus next week after Fed’s hawkish shift

Next week will be critical to assessing the way forward as a fresh batch of inflation data is released and several central banks face the press cameras. On the side, political developments might add excitement to markets. read more

Monetary policy in scope with FOMC minutes and ECB strategy review

Monetary policy in scope with FOMC minutes and ECB strategy review

This week (5th - 9th July), the meeting minutes from the Fed’s June meeting will be scoured by market participants as they try to gain a clearer view on future US interest rates, and the ECB’s Governing Council is set to also meet next week in Frankfurt to discuss the ongoing policy review. read more

First Nonfarm Payrolls since Fed may cause significant volatility

First Nonfarm Payrolls since Fed may cause significant volatility

Last week, volatility in FX markets was largely driven by the hawkish shift by the FOMC, as broad dollar moves drove price action in G10 currency pairs. This week, the focus remains largely on the US, with the release of the first Nonfarm Payrolls report since last week’s Fed meeting. read more

Markets to tune into FOMC speakers after the Fed’s hawkish shift

Markets to tune into FOMC speakers after the Fed’s hawkish shift

The focus next week will now be on US data and whether that can live up to the expectations set by the Federal Reserve, while a few FOMC speakers will provide markets with a bit more clarity on their position on the economic outlook.  read more

A week of central bank decisions but the Fed will draw most of the focus

A week of central bank decisions but the Fed will draw most of the focus

The Federal Reserve, Central Bank of the Republic of Turkey, and the Central Bank of Brazil are likely to be the most exciting on this week's agenda. Over the weekend, events in the UK will focussed on the government’s decision to stick to its June 21st reopening plan as cases of the delta variant rise.  read more

It is all about PEPP

It is all about PEPP

Looking ahead, central banks will come back to the fore next week with the European Central Bank, the Bank of Canada, and the Bank of Russia releasing their latest policy decisions. The ECB is likely to steal the show as speculation over the next PEPP decision rises. read more

All eyes on US and Canada labour market data after underwhelming April reports

All eyes on US and Canada labour market data after underwhelming April reports

Next week (31st - 4th June), the focus turns to labour market data from the US and Canada after April’s underwhelming reports. Also on the agenda are policy decisions from the RBA and Reserve Bank of India and China’s official manufacturing PMI. read more

Limited top-tier economic data puts USD dynamics further into focus

Limited top-tier economic data puts USD dynamics further into focus

Next week (24th - 28th May), the economic calendar is light on major market-moving events. US PCE inflation stands out as the most high profile data point on the calendar along with the latest RBNZ rate decision, while the focus will remain on central bank speakers. read more

European vaccine rollout takes centre stage while developing countries struggle with a dire Covid situation

European vaccine rollout takes centre stage while developing countries struggle with a dire Covid situation

We continue to track the evolution of the vaccine rollout in major economies, as a timely gauge of potential reopening and global economic recovery. In this edition, we highlight the European efforts to catch up with front-runners like the UK and US, while stressing the dire picture in some emerging markets. read more

A post Brexit Britain leaves sterling at the mercy of Covid-19 developments

A post Brexit Britain leaves sterling at the mercy of Covid-19 developments

The stale nature of Brexit developments over the course of Q4 means it has been some time since our last GDP outlook. In the latter stage of 2020, despite Covid-19 developments, the pound continued to trade based off no-deal Brexit risk as the clock wound down and negotiations stalled. read more

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