USD/CAD - Loonie at 3-Mo. Low on BoC Dovish Tone

The Canadian dollar lost ground against its G10 trading peers after the Bank of Canada rate decision yesterday. The market was not surprised by the BoC's move to hold interest rates at 1% after a data dependent central bank got a big miss in Consumer Price Index and Retail Sales last Friday. But what was not priced in was the cautiousness of future rate hikes from the central bank. The loonie fell to a three-month low against the U.S. dollar and four-month lows against the sterling and euro.

The greenback is somewhat mixed this morning after price adjustments due to global central bank policy announcements over the last 24 hours. The most prominent central bank event risk for the greenback was the European Central Bank this morning, which left rates unchanged and introduced its 2018 plan to wind down its Quantitative Easing program from 60 billion a month down to 30b; the ECB said it would maintain interest rates at current levels well past the end of QE. Economic data for the U.S. are weekly jobless and continuing jobless claims; Goods trade balance also released, and data printed 233,000, 1.893 million, and -64.1 billion respectively. At 10 a.m. investors will ponder Pending Home Sales, followed by a speech from Federal Open Market Committee member Neel Kashkari at 10:30 a.m.

Investors expect a range today of 1.2766 to 1.2875

The European Central Bank took the spotlight this morning and left rates on hold at 0.00-0.25%, but extended its QE programme at a reduced pace of EUR 30B/month until April 2018, maybe beyond. This key wording of “maybe beyond” was the dagger to the bulls, as they were expecting a firmer exit of their stimulus plan. The euro has initially dropped on this announcement, and now ECB President Mario Draghi is currently speaking at the press conference. The euro is currently trading at $1.5080.

Commentators expect a range today of $1.4992 to $1.5073

The U.K. suffered a much worse than expected Confederation of British Industries Retailing Reported Sales results of -36 when the expectation was for 14, which is the lowest level since 2009. Even with the soft results, this does not affect the probability of a 25-basis-point rate hike next month, as chances rose to 90%. The pound is currently trading at $1.6910.

Experts expect a range today of $1.6861 to $1.6966

The Australian dollar is stabilizing today after yesterday’s sharp fall. The commodity currency was heavy sold off yesterday after domestic inflation numbers missed the target and dampened any expectations for a Reserve Bank of Australia rate hike in the near term. On the data front, traders will get Australian Producer Price Index tonight at 8:30 p.m. ET. The forecast is for an increase of 0.4%. The Aussie is expected to remain soft as it continues its recent downtrend.

Oil (WTI): $52.16 U.S. per barrel

Gold: $1,274.56 U.S. per ounce

Silver: $16.85 U.S. per ounce

Copper: $3.1615 U.S. per tonne

Dollar Index: 94.07

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