Yesterday, the Euro rebounded early, after hitting on Monday a fresh low of 1.1725 against the US Dollar, as investors await for the European Central Bank’s (ECB) policy meeting tomorrow. The ECB is expected to offer more insight into its plans for tapering the QE program that is currently set to continue until the end of 2017. Expectations centre on a 9-month extension of the program at half the current monthly pace of EU60b. ECB officials have acknowledged that stimulus is still required to nurture inflation and that interest rates will remain “at or below” current levels for the near future. Comments Meanwhile, Catalonia’s separatist crisis pressured the Euro yesterday. Madrid has invoked special constitutional powers to dismiss the Catalonian regional government and force elections to counter the independence movement.
Since Monday, Sterling steadied, with any optimism around progress in Brexit talks being overshadowed by a Dollar boosted by speculation about a more hawkish chair of the US Fed. British Prime Minister Theresa May said that she was “ambitious and positive” about the country’s future and its negotiations to leave the European Union, describing the talks as being conducted in a “constructive spirit”.
On Monday as well, the Canadian Dollar edged lower against the US Dollar, ahead of the Bank of Canada (BoC) meeting today. The currency had fallen by the most in nine months as a drop in domestic retail sales bolstered expectations that the Central Bank would hold steady at its policy announcement tomorrow after hiking back to back in July and September 2017.