FX Market Review: RBC Capital Markets

Excerpts from RBC Capital Market Review Report

EUR: The ECB's Coeure said overnight that the ECB would continue to buy ~€3bn of assets every day and that the euro economy is at the beginning of a virtuous cycle. Schaeuble said he didn't think expansionary fiscal and monetary policies are a good way to deal with stagnation and also admitted they had experienced a certain amount of irritation while helping Greece. EUR/USD is struggling to hold above 1.06 at the moment.

GBP/USD has slid overnight and remains precariously close to key support at 1.4832 as highlighted by our technical analysts. Spot is 1.4860-65. 

CAD: RBC economists are more optimistic on February's labour force report than the median estimate. Our call is for an 18k rise in employment to be reported (cons: -5k), which would be consistent with the trend seen for H1'14. We consequently look for the unemployment rate to hold at 6.6% (cons: 6.7%). If we are right, our technical analysts highlight 1.2660 on the downside as a level to watch in USD/CAD (spot 1.2715-20) and 1.3433 in EUR/CAD (spot 1.3490-95). Our commodity strategy team have published a piece on Iranian nuclear negotiations, in which they argue that the odds of a framework agreement are 55% and that such an outcome would exert additional downward temporarypressure on oil prices. Oil is a touch weaker overnight, with the front WTI contract down to $47.05-10.

JPY: Prime Minister Abe gave some balanced comments on the exchange rate in parliament, saying that it would be best if it were to move in line with fundamentals. January industrial production was revised lower to a still-respectable 3.7%m/m rise.

AUD/USD was meandering around 0.77 for most of the overnight session but has dribbled down to 0.7680 in the early European hours.

NZD/USD is 0.7380-85 and AUD/NZD is back above 1.04.