Forex News Review – Euro steady above $1.31; CAD stronger after BOC meeting

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The euro was little changed in the US session after rallying against the dollar in the European session following a successful Spanish T Bill auction and better than expected German  investor sentiment data. EURUSD rose to 1.3171 and remained above at $1.31 after dropping yesterday below $1.30 for the first time in two months. The focus turns to the Spanish bond auction ion on Thursday.


Sterling was lifted today against the dollar after UK inflation data that gave rise to speculation that the Bank of England will not be inclined to expand quantitative easing in May. The focus turns to the BOE monetary policy minutes of the April meeting tomorrow. After a sharp rise following the CPI data, GBPUSD climbed to a European session high of 1.5969 but eased slightly on profit taking in the New York session.


The yen weakened against most of its major counterparts  as demand for the safe haven Japanese currency fell while risk appetite increased. This was due to the good news from Europe regarding the German investor confidence report and Spanish bill auction. The yen fell 0.6 percent on the day as USDJPY rose to a high of 80.91. EURJPY also rose, testing highs of 106.30.


The Canadian dollar gained the most in four months against its U.S. counterpart after the Bank of Canada rate decision and policy statement. The benchmark interest rate was kept unchanged at 1 percent as expected, and the central bank’s policy statement had a more hawkish tone and signalled the likelihood of a rate hike with possible upward revision to GDP growth. The loonie strengthened by over 90 pips after the release of the data. This pushed down the USDCAD pair to trade lower at 0.9864 from 0.9958 prior to the news.