Morning Commentary & Currency Insights – March 19, 2018

Print Friendly, PDF & Email

The British Pound has been the big mover to start the week as UK negotiators have reached a deal with the European Commission on the terms for the Brexit transition.  This has seen Sterling gain 1.25%+ against G7 counterparts.  There are also G20 meetings for the first two days of the week but all eyes will be on the FOMC rate announcement and following press conference at 2 PM EST this Wednesday.  Expectations are for a 0.25% hike taking the lending rate to 1.75% but much of this, if not all, is already baked in to current market levels.  The press conference & accompanying statement will be key for markets as 4 hikes are anticipated for 2018 and confirmation of this must come out of this to keep the dollar steady.  Thursday we have a rate decision coming from The BoE in the UK with no move anticipated.

The Canadian dollar has continued to slide as the combination of NAFTA concerns, the Bank of Canada on hold and relatively benign economic data has conspired to keep our currency at the bottom of the G10 bucket.  USD/CAD technical indicators are at overbought levels that are consistent with tops of the market seen over the past 3 years but a move towards 1.3180-1.3320 cannot be ruled out (see attached chart).  Breaking above the 1.3000 pivot point has emboldened USD bulls and this level should also provide support for the short term.  Canadian inflation data will be eyed on Friday as an important release with a higher print likely to take the edge off recent USD strength.

Share this: