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NBC Daily Forex: May 02, 2013

ByThe National Bank of Canada
Published 05/02/2013, 06:05 AM
Updated 05/14/2017, 06:45 AM

After disappointing ISM survey results on Thursday, the Fed maintained its key interest rate unchanged as forecast, but, more significantly, reiterated its commitment to purchase $85 billion per month in assets on the markets. In addition, Fed Chairman Bernanke indicated that the program could be increased depending on difficult economic conditions; the unemployment rate remains a significant concern. This should put more negative pressure on the USD.

It should be noted that the Chinese yuan is currently trading at record high levels against the USD. Increased use of the yuan in exchanges with China is fuelling this gradual progression. Currency hedging solutions are available for your yuan or USD transactions, based on a USD/CNY rate.

In Europe, the new Italian prime minister’s call for growth over austerity is being well received in Paris: French President Hollande agrees that policies should be focused less on austerity and more on supporting economic development. This morning, in Bratislava, Slovakia, the ECB is expected to announce that it will reduce rates for the first time in 10 months. OECD is now forecasting a 1.5% decrease for Italy in 2013; Spain’s economy is in its 7th quarterly contraction, down from the annual pace of 2% in the first quarter. The ECB is under very strong pressure to cut rates.

Warning: US Non-farm payroll tomorrow morning. Benoit Marcoux

Range of the day: 1.0000-1.0100

Economic Data

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