Forex Market Overview: Tuesday was mainly a day of speeches and oil volatility. EU officials shared their thoughts on Brexit, while bank of Canada Governor Stephen Poloz defended the use of inflation targets. Next, we have New Zealand’s cash rate to look forward to. Here is a recap.
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ECB’s Draghi Looking to Compromise
Kudos to Super Mario! The European Central Bank’s chief tried to defuse a conflict with European and Italian authorities over its plans for ridding eurozone banks of bad loans. This could open the door to working with other institutions and tailoring its approach to each bank.
On another gutsy move, he also called on banks to cut costs instead of blaming the ECB’s monetary policy for poor profitability.
Despite this, the EUR trading crowd didn’t seem to like what they heard. EUR/USD continued it mild drops below the key pivot level of 1.1727. The pair also remains below the cloud of Ichimoku Kinko Hyo‘s daily setup.
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Forex Market Overview: Canadian Dollar Movers
There were two things moving the Canadian dollar crosses on Tuesday. Bank of Canada’s Poloz, and oil.
Bank of Canada Governor Stephen Poloz defended the use of inflation targets on Tuesday and said that policymakers will be cautious about future interest rate moves even as encouraging signs of wage growth show up.
Oil, on the other hand, erased its previous gains. Here’s what’s been going on.
On Monday, Saudi Arabia blamed Lebanon and Hezbollah – an Iranian-backed militant group – for a missile launched over the weekend aimed at Saudi Arabia’s capital. It says this attempted attack from Iran and its proxies was an “act of war.”
This weekend Saudi Arabia also detained a bunch of the country’s princes and other gov officials. Meaning it looks like the Saudi crown prince is consolidating power during a pretty tense time.
With all these tensions, oil’s prices started going up as market participants got nervous about demand. But then as tension flared between Saudi Arabia and Iran, so did the price of oil.
Being directly corelated to oil price, CAD crosses also dropped versus major counterparts.
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Coming Up…
On the economic calendar today we have Japan’s Leading Index CI (SEP P) at 5 AM GMT.
Later, we’ve got the MBA Mortgage Applications out of the US at 12 PM. Canada’s Housing Starts (OCT) and Building Permits (SEP) will be up next at 1:15 and 1:30 PM respectively.
Finally, during the next day’s Asian session, we have the all-important RBNZ Official Cash Rate at 8 PM GMT. Market participants expect the cash rates to remain unchanged at 1.75%. Finance Minister Grant Robertson mentioned yesterday that there are no plans to include Kiwi’s levels in RBNZ’s new mandates.
But there still could be some surprises.
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