The USD slipped on Monday off one week highs against a basket of currencies as hopes of a Sino-American trade deal encouraged a move away from safe haven assets and focus grew on slowing U.S. economic momentum. Focus this week will be the U.S. Federal Reserve meeting on Wednesday where it is expected the Fed is expected to cut interest rates
CAD is slightly up against the USD dollar this morning. The Bank of Canada decision Wednesday is the highlight for this week. Regardless of the outlook for easier Fed policy-strong employment growth higher wages, on target inflation and above expectations growth mean that policy makers can sit on their hand and await developments, suggesting a neutral hold statement. A clear push under support of 1.3135 may target a drop to 1.2925 in the next few weeks. Longer term, loss of support in the upper 1.30s implies a stronger technical risk of persistent USD weakness.
The EUR is broadly firmer today below 1.1100. The outlook for the euro has improved along with expectations for a trade deal and a Brexit deal. Bond markets are looking at a very busy week in Europe with GDP coming out on Thursday. It is expected that economic growth should come in at 0.1%, down from 0.2% in the previous quarter.
Sterling was little changed on Monday after the European Union granted Britain a three-month extension to exit the bloc just three days before the original deal expires as expectations of a delay were already priced in the currency. Traders focus now shifts to a parliamentary session today at which lawmakers are expected to vote whether to hold an early general election.