Daily Currency Update
The US dollar gained against a basket of currencies on Monday ahead of key central bank meetings this week. The the US Federal Reserve, the Bank of England and the European Central Bank all have meetings due in what could be a very volatile week for FX markets. Wednesday’s Federal Reserve meeting could see a change in the bank’s view on inflation and they may announce a quicker tapering of bond purchases. If this happens and we see a more aggressive approach, we could see the US dollar push higher this week. The ECB meet on Thursday and consensus is that they might look to keep their options for tapering very open going into the new year, with no dramatic changes expected. USDCAD was up 0.61% trading at 1.2799 at the time of writing.
Key Movers
The pound started the week on the back foot after UK Prime Minister Boris Johnson announced on Sunday that Britain faces a “tidal wave” of new Omicron infections and that two vaccine doses may not be enough to contain it. Against the US dollar, the pound sat around 1.3234 at the time of writing, having also recovered from yearly lows at around 1.3160 last week. The Bank of England monetary policy meeting is set on Thursday, and policymakers have stated that they may wait on further information on the economic impact of the new variant before they raise rates next year. Many expected this to happen at Thursday’s meeting, but the latest concerns over Omicron could potentially delay rate hikes once more. EURUSD also moved lower this morning, trading around 1.2920.
Expected Ranges
- EUR/CAD: 1.4358 - 1.4468 ▲
- GBP/CAD: 1.6837 - 1.6958 ▲
- AUD/CAD: 0.9091 - 0.9125 ▼
- USD/CAD: 1.2707 - 1.2818 ▲