- The ECB debating a 25bps or 50bps increase
- A drop in WTI oil prices
- The US dollar rises in thin trading
USDCAD Snapshot: WTI oil $95.55 and Gold $1684.28; open: 1.2914-18; overnight range: 1.2862-1.2925; close: 1.2881
The Canadian dollar lost all of its early-morning gains from yesterday before consolidating those losses overnight.
Despite the fact that it was hotter than in May, traders ignored the release of the inflation report on Wednesday. According to Statistics Canada, “Following a 7.7 percent increase in May, the rate of consumer inflation increased once more in June, reaching 8.1 percent year over year. Since January 1983, the increase represented the largest yearly change. Although the price increases accelerated in June, they were still widespread, with seven of the eight major components rising by 3 percent “r more.”
The data would typically have caused the Canadian dollar to soar because it suggests a forceful Bank of Canada response. At its monetary policy meeting last week, the BoC increased interest rates by 1 percent in anticipation of the high reading.
Oil prices served as a guide for Canadian dollar traders. In early New York, West Texas Intermediate dropped 9.0 percent to $94.62/b after reaching a high of $103.95/barrel on Wednesday. After Russia began pumping gas through the Nord Stream 1 pipeline, albeit at 40% capacity, prices are slightly retreating in relief. On worries about weaker demand in the US and China as well as a resurgence of Libyan supply, prices also dropped.
Today will mark the first time in 11 years that the ECB will increase interest rates. The only issue is whether the percentage is 0.25 or 0.50. Due in part to expectations of a 0.50 bp increase, the EURUSD dropped to 1.0230 in Asia before falling to 1.0167 as traders began to doubt their decisions.
Although the flow was only 40% of its potential, there was a lot of background noise, including Russia restarting gas pumps into the Nord Stream 1 pipeline.
Italian politics are in a state of perpetual chaos. As a result, Italian bond yields increased, European stock markets declined, and the ECB’s soon-to-be-announced bond fragmentation tool was severely hindered.
Due to UK political unpredictability and broad US dollar strength, the GBPUSD is currently close to the bottom of its 1.1922-1.2022 range.
Nobody was shocked when the Bank of Japan maintained its monetary policy and interest rates.
Within a range of 138.00-138.87, USDJPY traded steadier.
Broad US dollar demand caused AUDUSD and NZDUSD to decline.
Weekly jobless claims, which are expected to total 24,000, and the Philadelphia Fed Manufacturing Survey are among today’s US data (forecast 0, previous -3.3)
