- The Eurozone energy crisis persists.
- Potentially more hawkish BoE could be on the horizon.
- BoC 1% raise in interest rates offers CAD support.
Stock Markets weighing an even more aggressive Fed
The market is reflecting bearish signals for this currency pair. The Euro to US Dollar exchange rate has fallen below parity in the wake of a surge in US Dollar demand. Looking at the combination of events leading to the fall of the EUR/USD, we observe that the stock markets are in the red as they attempt to anticipate the potential effects from a potential 100 basis point hike from the Federal Reserve.
The Euro is still struggling as concerns around the seemingly unwavering energy crisis in the Eurozone persists.
EUR/USD Price Chart
Potentially more hawkish BoE could be on the horizon
The market is reflecting bearish signals for this currency pair. The most recent commentary suggests to the market that the Monetary Policy Committee at the Bank of England (BoE) is only one employment report or one inflation number away from a step change in the pace the Bank Rate is being lifted, and that a change of this sort could come as soon as August. This move could offer the pound support going forward.
EUR/GBP Price Chart
BoC hawkish moves offering CAD support
The market is reflecting bearish signals for this currency pair. The US Dollar had a strong start to Thursday's trading day as investors priced in the growing expectations for a 100 basis point increase in interest rates from the Fed in the wake of the 9.1% US inflation data that was released on Wednesday.
On Wednesday the Bank of Canada (BoC) shocked markets with their largest interest rate hike since 1998. The hawkish move from the BoC has offered the Canadian Dollar support and has thrown a curveball at investors, leaving a range of responses from analysts.
USD/CAD Price Chart
The market is reflecting bearish signals for this currency pair. The US Dollar has reversed yesterday's pullback which occurred in the wake of US inflation data being released. The BoJ continues on their dovish monetary policy path.
USD/JPY Price Chart
Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com