Asia Pacific Market Open – Canada CPI, Brexit Latest, Australian Dollar, Euro
- Canadian Dollar[1] sinks on softer-than-expected inflation report ahead of BoC rate decision
- British Pound[2] sees knee-jerk volatility as potential Brexit compromise creates a new issue
- Australian Dollar[3] may gap lower given political uncertainty while Euro[4] could turn lower
We released our 4Q forecasts for the Euro in the DailyFX Trading Guides page[5]
The Canadian Dollar underperformed against its major counterparts Friday following a softer-than-expected local inflation report. Canada’s headline CPI rate clocked in at 2.2% y/y in September versus 2.7% anticipated which was its weakest since May. This comes ahead of this week’s BoC rate decision. While rate hike bets were reduced, core inflation only ticked down to 1.9% from 2.0%.
Meanwhile the Euro edged cautiously higher verses its peers after welcoming remarks towards Italy from EU Commissioner Pierre Moscovici. He noted that members are engaged in ‘good dialogue’ with Italian government heads, adding that the EU won’t interfere in their economic policies. This was also a reversal of Thursday’s rather pessimistic tone which boded ill for the Euro[6].
One currency that saw sudden knee-jerk volatility was the British Pound, and it was fueled by the latest Brexit news. Reports crossed the wires that the nation was ready to drop a key Brexit demand on the Irish Border in order to ease a deal. Initially, GBP/USD[7] rose aggressively. However, most gains were pared as this created a potential issue for UK Prime Minister Theresa May and her grip on power
