Strong commodity prices are supporting the C$ in a push to new 2-week highs. While there has been an overnight pullback a C$ retest higher is likely later this morning. Bank of Canada Poloz is speaking this afternoon, so the C$ will also be taking direction from his comments. Poloz has been an advocate for a pro-growth weaker C$ and lower rates. If the market gets a reconfirmation of that policy from Poloz look for weakness at the end of the day.
The US$ tried and failed twice to rally yesterday and overnight on news of stronger retail sales, however the Fed reiterated a moderate pro-growth policy stance and will not be raising rates anytime soon. This did however help the stock market to new highs. There are a large number of economic numbers due today to provide direction. If there are no surprises, given the lack of support overnight, look for more US$ weakness today.
The UK government reports that the EU is supportive of a Brexit deal and expects a parliament vote next week. Any agreement, no matter how unfriendly for the economy, will eliminate uncertainty which allows business to adapt to changes. Look for GBP and EUR to strengthen slightly today, GBP more than EUR.
Key Economic Numbers: Forecast Previous
US Durable Goods Orders (Dec) 2.5% 0.8%
US Initial Jobless Claims (Feb) 230,000 239,000
US Existing Home Sales (Jan) 4.99 Mill 5.1 Mill
- Drummond Gill