Highest demand for CAD in three years

Key Movers

The euro edged back toward 1.20, advancing in wake of the ECB’s policy update. The single currency fell to intraday lows at 1.1920 leading into the bank’s monthly update, before pushing toward intraday highs at 1.1990 after ECB president Lagarde promised to frontload bond purchases through the short term. The commitment to increase the pace of bond purchases past the current 60bn helped drive down bond rates. The correction in bond rates coupled with modest long run inflation expectations and a commitment to accommodative monetary policy helped drive risk gains.The Australian dollar tracked higher through trade on Thursday, pushing through 0.7750 and nearer 0.78 US cents. Improved risk demand helped drive gains across asset classes with the S&P 500 and NASDAQ recording strong gains, dragging the AUD higher. Having bounced off lows at 0.7620, the AUD appears to have staved off any immediate threat of a broader downturn. With price action across bond rates and treasury yields moderating and risk appetite returning, the door is again open for the AUD to make another run toward 0.80 US cents.