Carney speaks again There was relatively little movement in the major currency pairs yesterday. Overall the euro was a touch firmer. While the EURUSD appears to have found support just north of 1.3500, it currently feels unlikely that the single currency will be able to break much above 1.3700 against the US dollar in the near-future. In the current environment, volatility is low. It feels as if the developed-world central banks are taking it in turns to orchestrate manageable rises and declines in their respective currencies. This would be an attempt to pander to both exporters (who favour a weak domestic currency), and home-grown consumers who can take advantage of cheaper imports when their currency is strong relative to others. Central banks are also trying to convince investors that they have some understanding about how their unprecedented programmes of monetary stimulus can be unwound in an orderly fashion. However, the recent flip-flop-flip (dovish-hawkish-dovish in the space of six weeks) from Bank of England governor Mark Carney and his Monetary Policy Committee has only led to growing investor frustration. The Canadian dollar continues to head higher. It has been in favour with investors thanks to a steady stream of positive economic data releases out of Canada. But as a commodity currency, it has also benefitted from the recent spike in crude oil prices as investors worry about the instability which is spreading across Iraq. Yesterday it made back all of Tuesday’s losses and more. The USDCAD is now trading around the 1.0700/20 level. This is significant as this price band acted as an area of US dollar resistance on a number of occasions back in December last year. It looks likely that the USDCAD will consolidate around this area. After all, the currency pair has fallen sharply over the last three weeks and Brent Crude has pulled back a touch after hitting a ten-month high earlier this month. However, if oil prices push higher and if we hear any dovish rhetoric from members of the US Federal Reserve, then we can expect the USDCAD to head towards its next significant support level at 1.0600. Bank of England governor Mark Carney speaks again this morning. He is due to hold a press conference about the Financial Stability Report. The European Union Economic Summit begins today. Meanwhile on the data front, from the US we have Weekly Jobless Claims, the PCE Price Index, Personal Income and Personal Spending.
Posted on: Thu, 26 Jun 2014 07:10:13 +0000
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