Loonie Rallies Before US Fed Meeting


Wednesday, June 13, 2018

The loonie is up versus almost all trading pairs despite no domestic releases to support the move. With no first tier Canadian economic releases for the remainder of the week, the CAD will be at the mercy of further political risk, technical trading, and relative strength in other currencies based on central bank actions.

All focus will be on the US Federal Reserve decision on rates and the associated press release by Chairman Powell. It is expected the Federal Reserve will raise their benchmark interest rates by 0.25% to 2.00% and most analysts believe this is already reflected in current exchange rates. The press release and statement after the expected raise will drive the direction of the US dollar. Earlier in the morning producer price index data beat expectation with PPI at 0.5% vs expected 0.3% and core PPI at 0.3% vs expected 0.2%.

The Euro is consolidating before an important European Central Bank meeting scheduled for Thursday. Some analysts are predicting the ECB will release a plan to unwind the current asset buying stimulus program. There is no expectation they will raise interest rates. Overall Eurozone quarterly employment was up 0.4% while monthly industrial production was down -0.9%.

Equities are slightly up this morning: the Dow up 0.00%, the S&P up 0.05%, NASDAQ up 0.39% and the TSX up 0.06%.  Crude Oil is up 0.17% this morning ($66.47) while Gold is up 0.07% ($1,300.30)


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