EURUSD grinds higher on recovery hope
The euro continues to recover as the economic outlook brightens.
Its underlying strength is due in part to expectations of a reduction in the Pandemic Emergency Purchase Programme. Despite the ECB’s own patient script, the single currency benefits from the Fed’s resolutely dovish stance.
Robust GDP growth and inflation in the US have so far failed to topple policymakers’ reassurance on low-interest rates. One of the missing keys would be a sustainable recovery in the labor market.
Upbeat nonfarm payrolls may cap the euro’s advance at January’s peak at 1.2340. 1.2060 is the closest support in case of a pullback.
AUDUSD consolidates ahead of RBA decision
The Australian dollar has been on a slow grind as traders await the RBA’s interest rate decision. The neighbor RBNZ’s switch to a hawkish tone in their latest meeting may have a proximity effect.
Australia’s strong property market and resilient economy would argue in favor of tapering next year.
However, with inflation still subdued and Victoria under lockdown rules once again policymakers may not be in a rush to update their agenda.
0.7570 is a key support to keep the optimism intact. A confident outlook would lift the Aussie towards the peak and psychological level of 0.8000.
USDCAD slips on policy divergence
The Canadian dollar continues to advance thanks to strong tailwinds. Bank of Canada’s monetary policy divergence with the Fed is still the main fuel for the loonie’s appreciation.
Traders cannot help but raise their bearish bets against the greenback after US officials’ reiteration that interest rates would stay flat.
In addition, the high price of oil, Canada’s major export offers an effective floor in case of a pullback. Solid growth and jobs data out of Canada this week could further support the currency.
The pair is sliding towards April 2015’s low at 1.1930. A rebound will need to clear 1.2350 first to become meaningful.
NAS 100 recoups most losses
Growth stocks hold steady as investors try to see through a cloud of data.
While growth and price data point to a strong recovery of the US economy, the real question is whether inflation is only transitory. This is what the Fed would like the market to believe by sitting on their hands.
Volatility in employment data is yet to offer a clear picture to tip the balance. One thing certain is that investors dislike uncertainty, and they may think twice before dipping their toes in high valuation waters.
The Nasdaq is testing the key supply area between 13800 and 14080. A bullish breakout could resume the uptrend. 12800 remains a major support.
