July 22, 2021
EUR/USD: The euro fell against the US dollar yesterday as investors shifted their focus to the upcoming ECB meeting. On a quiet day for economic data, currency markets look ahead to the European Central Bank (ECB) meeting. A dovish tone is expected after ECB President Christine Lagarde hinted at changes in the management team in her interview last week. Yesterday, the safe-haven dollar pulled back from its three-month highs as US stocks grew despite caution regarding inflation fears and concerns about Covid infections. Analysts expect that it should help to clarify the ECB’s new inflation target. Markets expect a more dovish agenda, which would mean a total reduction of the monthly purchases next year.
USD/CAD: The USD/CAD pair came under strong bearish pressure today after trading in a tight range of around 1.2700 during the European session. Loonie showed a huge uptrend, while the pair fell to 1.2523 level before going into a consolidation phase. CAD was provided a boost by the rebound of WTI prices during the American trading hours. Although the US Energy Information Administration’s weekly report showed that oil stocks increased by 2.1 million barrels, the barrel of West Texas Intermediate oil kept its bullish momentum, supported by risk flows. On the other hand, the renewed USD weakness put additional weight on USD/CAD buyers. There won’t be any macroeconomic events from Canada today, but the risk perception and its impact on crude oil prices will probably remain the main driver of the loonie’s movements in the near term.
S&P500: Wall Street had another upbeat session as positive companies’ reports refreshed market optimism amid a light calendar on Wednesday. In doing so, investors ignored the coronavirus concerns as well as uncertainty over US President Joe Biden’s infrastructure spending bill and budget. On the other hand, the US spending deadlines are inching closer and the policymakers are pushed to discuss a fresh budget to avoid government office closure. However, the diplomats are yet to mark any progress on this question, while renewed optimism about the US economic recovery supporting a risk-on rally.