ECB keeps rates on hold; appetite for safe haven assets continues
European Central Bank rates go unchanged which was expected by the markets. The Canadian dollar remains weak following a statement from Governor Stephen Poloz yesterday which alluded to potential rate cuts. China attempts to contain a deadly respiratory virus - the threat of spreading has supported safe haven assets including the Japanese yen.
January 23, 2020
EUR/USD 1.1071 GBP/USD 1.3115 USD/CAD 1.3160 AUD/USD 0.6866 USD/JPY 121.2300 USD/CNH 6.9347 USD/ILS 3.4579 USD/MXN 18.7459 USD/CHF 0.9680 USD/INR 71.2738
USDThe dollar is trading higher versus most peers. Jobless claims data showed that the number of Americans applying for unemployment benefits rose less than expected. This supports the view from the Federal Reserve that the US jobs market remains tight.GBPSterling remains largely unchanged trading within the 1.3100 handle. The market will remain focused on PMI data due to be released on Friday which could signal potential interest rate cuts.EUREuropean Central Bank released decision that rates will remain unchanged. The currency pair remains largely unchanged trading within a range of 1.1079 – 1.1109.CADBank of Canada Governor Stephen Poloz stated yesterday that the central bank may look to ease policy in order to counter a slowing economy. The Canadian dollar has weakened for the third day with USD/CAD trading at a high of 1.3172.ASIA/PACIFICThe Japanese yen strengthens on fears of the respiratory virus in China spreading. China is trying to lock down the city of 11 million people in order to contain the virus that has already killed 17 people.
Data out of Australia showed that unemployment declined unexpectedly. The currency pair is up 0.5% after the data. The report showed that unemployment declined to 5.1% vs. the expectation of remaining steady at 5.2%. The market is now pricing in just a 25% chance of a rate cut at the Reserve Bank of Australia’s meeting next month.