FX market stays on hold today as major currencies await Fed’s policy signals; Europe to release the investigation on vaccine incidents and may cause selling pressure on EUR
• Major currencies on hold as investors eyeing on Fed’s meeting
• Europe to release investigation results on vaccine incidents, pressuring EUR
• AUD slightly retreated after RBA minutes
• CAD continues on the rise despite falling oil prices
Major currencies held tight on Wednesday, moving in small ranges, as investors anxiously eyeing on Fed’s policy meeting for potential changes on rates. Markets have been in great volatility since last meeting amid rising bond yields, but a bigger question for market players is whether or not the Fed would signal any inclination to start raising interest rates in 2023, given the positive outlook for 2021 and possibly the year ahead. If they go with this move, USD could be further fueled to rally.
Europe will soon release results on the investigations into incidents of AstraZeneca vaccine, including bleeding, blood clots and low platelet counts. Chief strategist at Sumitomo Mitsui comments that, “depending on the outcome, it could hurt Eurozone’s business sentiment further and EUR could face fresh selling pressure.” Vaccine rollout’s impact on currencies is quite clear – as it has bolstered GBP to rise aggressively against major counterparts.
AUD slightly retreated after RBA released its minutes with no surprise. The committee remains focused on employment and wage expectations and comments that, AUD has been experiencing sharp appreciation, but it is still lower than it would have been otherwise if the central bank did not intervene. Recently, RBA extended its QE program as part of its ultra-dovish monetary policy but insisted that it would not change its policy on the housing market, despite a 3.0% jump in the House Price Index in 2020Q4.
Despite the fall in oil prices, CAD has been pushed to fresh highs against USD. Currently CADUSD is trading at around 0.80, and WTI settled around $64.6 per barrel. Canada’s CPI will soon be released and is forecasted to land at 1.3% compared with the priori release at 1.0%.