Pound Returns to €1.1350 vs Euro Following Weaker Eurozone Inflation

The US dollar advanced versus the Canadian dollar on Wednesday. The US dollar Canadian dollar rallied 0.5%, in its biggest daily gain in almost a month. The pair closed the session at 1.3160 and is trading flat early on Thursday.

US Federal Reserve cut interest rates as was broadly expected. The central bank sliced off 25 basis points, taking the rate from 1.75% to 1.5%. This was the third time since July that the Fed has cut interest rates. The Fed signalled that it does not plan to cut rates further, instead it will pause and look towards economic data for a clearer picture.

Following the rate cut, Federal Reserve Chair Jerome Powell gave an upbeat assessment of the US economy, whilst acknowledging risks from the US — China trade dispute and Brexit. Jerome Powell’s hawkish comments over the US economy come following better than forecast US GDP data.

The US economy grew at 1.9% year on year in the third quarter. This is slightly down from 2% growth in the second quarter, but well ahead of the 1.6% growth that analysts pencilled in. The better than expected growth stemmed from stronger consumer and government spending. The figures combined with Fed Powell’s comments helped calm fears over the health of the US economy.

Today investors will look towards US inflation figures prior to Friday’s highly anticipated US non-farm payroll figures.

BoC Stay Pat, GDP Up Next

Wednesday also saw a central bank decision from the Bank of Canada (BoC). As market participants widely expected, the BoC kept monetary policy on hold, neither raising or cutting interest rates. However, investors were surprised by the BoC’s more dovish tone as they cut domestic growth forecasts for 2020 to 1.7% from 1.9% and for 2021 to 1.8% down from 2%. The central bank cited weaker global growth, foreign demand and lower government spending as reasons for cutting their growth outlook. Upon the release of the statement the Canadian dollar shot lower, lifting the USDCAD exchange rate.

The Canadian dollar could advance today following Canadian GDP data. Analysts predict an uptick in economic growth to 1.4%, up from 1.3%. Stronger GDP figures could help lift the Loonie.

Currency Live is a news site only and not a currency trading platform.
Currencylive.com is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on currencylive.com do not represent our views.