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Loonie surges higher on surprise BOC rate hike

Summary:

  • The Canadian dollar has rapidly appreciated after the BOC surprised markets by announcing a 0.25% rate hike
  • The DE30, Oil.WTI and cryptocurrencies are also enjoying big updays
  • Antipodean currencies have pared some of Tuesday’s gains
  • Highly anticipated ECB meeting tomorrow

 The second G10 central bank rate decision of the week has caused huge moves in the markets with the Canadian dollar rapidly appreciating across the board after the Bank of Canada (BOC) unexpectedly raised rates by 25 basis points.

Whilst the surprise Canadian rate hike has caused the largest moves this afternoon, there’s also been some important US data. The ISM non-manufacturing PMI print for August at 55.3 showed an improvement on the prior reading (53.9) but came in below expectations (55.8). The rise in the data however has failed to support the US dollar which remains under pressure

Elsewhere, there’s been a fairly strong move to the upside seen in the DE30 with the leading German stock index recapturing the 12200 level. The move in excess of 100 points has not been backed by any fundamental news and comes on the back of what was a soft open this morning. 

Weather in some parts of the US has been exceptionally dangerous of late. While losses after the hurricane Harvey have not yet to be added up, another much more powerful hurricane Irma is nearing the East Coast of the US. The first hurricane saw oil prices drop but OIL.WTI is rising strongly today as Irma approaches landfall.

 Virtually all key digital currencies are rising during today’s session but all of them are quite a long way off from their last week’s peaks. Let’s remind that Monday brought on a massive sell-off after the report coming from China. However, when the dust settled, investors rushed to buy cryptocurrencies once again.

Tuesday saw huge gains in both the Australian dollar and New Zealand dollar and whilst a case for some appreciation revolving around the RBA rate decision for AUD and the higher GDT auction results for the NZD the timing of the move suggested that these positive developments were far from the main drivers.Today has seen seem paring of these gains and the question now is whether yesterday’s trade marked a significant new move for these currencies or whether it was an erratic outlier.

The ECB meeting on Thursday could be the most important market event in September. The European economy has seen a major recovery so far this year and it is time for the ECB to respond. But isn’t the euro exchange rate already too high? Here’s our ECB preview

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