September 14, 2021
EUR/USD: The EUR/USD pair is correcting amid the local growth of the US dollar. The end of last week was rich in fundamental events that could affect the dynamics of the European currency. In addition to the president of the European Central Bank’s speech, there was also a meeting of the EU finance ministers. During both events, the authorities kept their rhetoric positive. In particular, the ECB president noted that the eurozone economy is recovering at a high pace. The ECB staff even revised up their forecasts for Gross Domestic Product this year. In August, inflation in the eurozone reached 3.0% and will continue to develop positive dynamics in the fall. Next year, it may decline to 1.7%.
USD/CAD: The Canadian dollar rose against the USD on Monday and was stronger than nearly all the other G10 currencies. The oil prices, one of Canada’s major exports, were supported by concerns over shut output in the United States because of damage from Hurricane Ida. U.S. Oil rose 1.2% to $70.53 a barrel, while the Canadian dollar was trading 0.2% higher at the level of 1.2665.
The currency traded in a range between 1.2662 and 1.2694. Immediate resistance can be seen at 1.2663. If the price overcomes this barrier, we can expect further growth towards 1.2684 and even higher.
USD/JPY: USD/JPY continues its uptrend on the back of Fed’s monetary policy tightening expectations after the release of strong PPI data last Friday.
Producer price index added 0.7%, beating analysts ‘expectations at 0.6%, while core PPI excluding US food and energy prices rose 0.6% on a monthly basis in August, above analysts’ forecasts for the level of 0.5%. This was the largest increase since November 2010, which indicates that high inflation may persist for a longer time than the US Federal Reserve suggests. This is further evidenced by the recent surge in US Treasury yields.
Investors remain concerned that the rapidly spreading delta variant of coronavirus could lead to a slowdown in global economic growth. In addition, the worrying sentiment is fueled by reports that representatives of the US Democratic Party are considering proposals to increase taxes for corporations to 26.5% from 21% and the introduction of a 3% additional tax on personal income exceeding $5 million. This, in turn, could provide some support for the Japanese yen, which could limit the sharp rise in the USD/JPY pair, at least for now.