Canadian Dollar Steadies Awaiting BoC Rate Hike, European Majors Weak

Market Reviews

The British pound is the weakest one, despite yesterday’s recovery. Euro and Japanese yen are also weak. Meanwhile, the US dollar, Australian dollar and New Zealand Dollar are trading as the strongest ones for today. Canadian Dollar is also firm awaiting Bank of Canada rate statement. European majors are weak amid Brexit uncertainty and the budget clash between the EU and Italy.

US equities staged a strong rebound and closed just slightly lower. DOW closed down 0.50% at 25191.43 after diving to 24768.79. S&P 500 lost 0.55%, NASDAQ fell by 0.42%. In Asia, Nikkei gained 0.70%, Singapore Strait Times rose by 0.46%, Hong Kong HSI increased by 0.13% and China Shanghai SSE gained 0.88%.

European Commission formally rejected Italy’s budget after its regular meeting yesterday. Vice President For the Euro Valdis Dombrovskis said that it was the first time, the Commission was obliged to request a euro area country to revise its draft budget plan. Italian Deputy Prime Minister, leader of the Five-Star Movement Luigi Di Maio said that European Commission’s rejection of the country’s budget was not a surprise.

The Bank of Canada will announce its rate statement today. The BoC is widely expected to raise its benchmark interest rate by a quarter of a percentage point in response to solid economic growth and a new trade pact with the US and Mexico.

Today’s data showed, that Japan PMI manufacturing rose to 53.1 in October, up from 52.5 and beat expectation of 52.6. Also, Eurozone will release PMI, together with M3 money supply. UK will release BBA mortgage approvals. Later in the day, US will release PMIs, house price index and new homes sales.

The British pound is likely to remain in the spotlight today, as British Prime Minister Theresa May prepares to address her Conservative Party legislators in a closed session in parliament later today to calm growing tensions over her Brexit strategy.