Central Bank Events To Watch This Week

Later in the week, the Bank of Canada meets, and like the Australian dollar, the loonie is trading strongly ahead of the rate decision. There’s talk that the central bank could taper asset purchases but we are not looking for any changes from the BoC. Job growth was very strong in February and with the U.S. charging forward with vaccine rollout, confidence in Canada is improving. However, in Canada itself, vaccine rollout is slow and just this weekend, the two most populous regions Ontario and Quebec tightened restrictions as more transmissible variants fuel rise in cases.

Euro and sterling also traded sharply higher but with U.K. and German markets closed, the move was driven entirely by U.S. dollar weakness and recoveries in oversold currencies. The outlook for the U.K. is far brighter than the Eurozone. Restrictions in the U.K. are easing as the opposite happens in the Eurozone. There are growing calls for a nationwide approach to COVID restrictions in Germany. All of this means that GBP will continue to outperform EUR and at some point, sellers will return to EUR/USD as well.

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