Loonie trades lower to start the week

Key Movers

The US dollar is showing bullish momentum to start the week following its recent gains against major rivals prior to the weekend.  Thanks in part, to recent macroeconomic data and optimistic statements made by the Federal Reserve, the US dollar has managed to maintain its position. The dollar index (DXY) continues its rebound towards 102.00 after a gain of over 0.5% on Friday. The continuation of the selling bias in risky assets and the increase in US yields in all maturities are both contributing to the increase. Meanwhile, the chance of a 25 basis point rate hike by the Federal Reserve on May 3 is likely. This is due to optimistic statements by federal officials. In addition, investors remain cautious regarding the persistently high levels of Inflation. Data out of the US revealed the New York Empire State Manufacturing Index improved to 10.8 for the current month following a contraction of 24.60 last month.

 

EUR/USD continues its downward correction trading below 1.0950 as the US dollar recovers. No European-focused data is scheduled for release today however European Central Bank (ECB) President, Christine Largade, is scheduled to speak later today. Also speaking today is ECB policymaker, Martins Kazaks. Kazaks recently stated that the central bank will have the option of either a 25 basis point or 50 basis point hike in May.

 

The sterling is losing traction as it drops below 1.2400 against the US dollar. GBP/USD faces downward pressure due to the renewed strength in the US dollar as expectations for a 25 basis points increase by the Federal Reserve next month are becoming more likely. Though no UK Data is scheduled for today, this week will be an important week for UK data releases with the February jobs figures coming out on Tuesday and inflation data on Wednesday. If this data reveals slowing inflation and stale economic growth, market speculation for Bank of England (BoE) interest-rate hikes will be scaled back, although this outcome would have only a modest negative effect on the value of the pound. BoE member, Jon Cunliffe, is speaking later today.