Loonieviews Weekend March 14, 2014

FX markets exposed as G7 debates sanctions

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Michael O’Neill

Filed in Loonie Views

Canada, 2 hours ago



• New video gameTitanfallNOT a comment on Putin
• Draghi warns of EUR gains’ relevance to price stability
• Canada on target for budget surplus next year

The USDCAD enjoyed another uneventful overnight session with the FX majors in a bit of a lull ahead of a major event risk expected next week. The Crimea referendum on Sunday is considered a foregone conclusion leaving FX markets exposed to inflammatory rhetoric as the G7 debates sanctions. The Federal Open Market Committee (FOMC) interest rate decision and statement, the Bank of England (BoE) minutes and key European data releases should ensure a relatively quiet North American session today. This morning’s US February PPI data were below forecasts (Actual negative 0.1 percent vs. forecast 0.2 percent, Core: Actual, negative 0.2 percent vs. Forecast, 0.2 percent) but were largely ignored. The Reuters Michigan Consumer Confidence index missed forecasts as well, coming in at 79.9 (Forecast, 82.0) which had no impact.

This week in brief

The big news this week was Titanfall, and no, not the John Kerry threat to Vladimir Putin over Crimea but the release of a video game by Respawn Entertainment. The news of the game created value while Kerry’s comments destroyed it. This week had it all. Plunging copper prices in response to weak Chinese data tarnished the global growth outlook while an interest rate hike and a more "hawkish" sounding statement from the Reserve Bank of New Zealand (RBNZ) gave a little shine to the commodity currencies. Surprisingly, strong Australian employment data on Thursday helped AUDUSD recoup all of this week’s losses in one fell swoop. Mario Draghi, the president of the European Central Bank (ECB), sucker-punched FX markets yesterday with verbal intervention, stating risks of too-low inflation and warning that EUR gains are increasingly relevant to price stability. EURUSD dropped like a stone.

Categories FX, Foreign Exchange, Currency, Canadian Dollar

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