Loonie Muscles Up Post FOMC

The Canadian dollar strengthened 160 points yesterday afternoon as markets react to the rate decision by the U.S. Federal Open Market Committee. The loonie has recovered from multi-month lows reached last week and is now in the middle of technical ranges. Looking ahead to next week, the Canadian Retail Sales and Consumer Price Index will be released on Tuesday and Friday respectively, the CPI should provide some insight on the economy and if the Bank of Canada needs to look at rate increases in the future.

The U.S. dolar is stabilizing today after the post FOMC slide yesterday. The Fed delivered the much expected 25-basis-point hike, but did not change its outlook on inflation and economic growth. The Fed stuck to its moderate stance and failed to deliver the aggressive outlook the market was looking for. However, a more aggressive policy stance by the Fed remains a risk as the U.S. government is committed to boosting growth significantly this year. The U.S. dollar outlook remains bullish and is not expected to drop materially.

Experts expect a range today of $1.3253 to $1.3338 Canadian

Euro-zone CPI released in line with expectations of 2.0% y/y on headline and 0.9% on core. Dutch election results show a win for the pro-European Union party, which supported the euro from falling any further. This is not the end of political risk, as the more significant French election is around the corner at the beginning of April. The euro is currently trading at $1.4276 Canadian.

Traders expect a range today of $1.4220 to $1.4320 Canadian

The Bank of England kept rates on hold at 0.25% and left Asset Purchase Target at 435 billion, as expected. For the first time in eight months, one member, Kristin Forbes, was in favour of a 25-bp-rate hike. In Brexit news, the bill has been finalized and it is now law, which will allow Prime Minister Theresa May to give formal notice to the EU regarding Britain's exit. The pound is currently trading at $1.6441 Canadian.

Observers expect a range today of $1.6379 to $1.6491 Canadian

The Australian dollar retraced some of its gains on softer than expected job data. Australian employment dropped by 6,400, missing the forecast for an increase of 16,300. The Unemployment rate increased to 5.9% from 5.7%. This might prompt the Reserve Bank of Australia to ease interest rate since employment is a core focus for the RBA.

Oil (WTI): $48.99 U.S. per barrel

Gold: $1,231.65 U.S. per ounce

Silver: $17.47 U.S. per ounce

Copper: $2.6698 U.S. per tonne

Dollar Index: 100.48

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