Home Featured The Week Ahead – Rate hike pause remains conditional

The Week Ahead – Rate hike pause remains conditional

The Week Ahead – Rate hike pause remains conditional


EURUSD is stable as ECB maintains smaller hikes

Chart of EURUSD

The euro is on the rise as a high-growth price momentum justifies tightening. After double-digit price readings last winter, the ECB predicts a prolonged disinflation. Still, Chief economist Philip Lane expects price momentum fuelled by wage growth to hold inflation above the bank’s 2% target for years. Other officials have echoed the same viewpoint, which led the market into believing that the ECB may continue to increase by 25 bp until summer. The central bank could then monitor the economic data and adjust its policy accordingly. 1.1250 The next resistance is a? 1.0800 Fresh support

USDCAD rises as Canada inflation is in focus

Chart of USDCAD

The Canadian dollar recovered its losses after the Bank of Canada opened the door to more rate increases. BoC Governor Tiff Macklem has stated that the central bank is ready to hike rates further if inflation remains persistently above the 2% target, which means that this week’s CPI will carry considerable weight. The BoC may stay out of the market if inflation continues to fall. An upside surprise, however, would increase bets on more policy.

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