European Economy Likely To Be Under Pressure In The Wake Of ECB’s Interest Rate Decision (EUR/USD, EUR/GBP), CAD Suffered Losses This Week (GBP/CAD)
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Summary:
- Fed representative speaks regarding the hazards of potential overtightening.
- EUR/GBP rose in the wake of ECB interest rate decision.
- On Thursday, the Canadian Dollar was still the second-best performing currency.
European economy likely to experience pressure
The market is reflecting mixed signals for this currency pair. The European economy will experience extra pressure from the ECB's interest rate decisions once they rise above this point because firms and families are already feeling the effects of the excessive increases in energy prices.
The dollar index (DXY) also formed a double top as a result of comments made by Mary Daly of the Fed regarding the hazards of potential overtightening and the likely transition from 75 bps raises to 50 or 25 boosts in the future. As a result, the index is currently trading approximately 3.5% lower.
EUR/USD Price Chart
EUR/GBP rose in the wake of ECB interest rate decision
The market is reflecting mixed signals for this currency pair. Thursday saw a rise in the exchange rate between the pound and the euro as the European Central Bank (ECB) announced another unusually substantial increase in interest rates and warned that the changing monetary policy settings could soon start to hurt the Eurozone economy. After the ECB increased all of its key interest rates by three quarters of a percentage point for the second time in a row and issued a warning that additional hikes would still be required in the months to come, the euro moved lower against other major peers, notably the pound.
EUR/USD Price Chart
CAD suffered significant losses
Following the Bank of Canada (BoC) decision to decrease the rate at which it raises interest rates in October, which stunned the market and caused many forecasters to reevaluate their prognosis for the Loonie, the Canadian Dollar fell behind other major currencies during the following week. On Thursday, the Canadian Dollar was still the second-best performing currency in the G10 group for the year, but it had suffered significant losses this week against all other currencies save the U.S. Dollar as a result of Wednesday's interest rate decision.
GBP/CAD Price Chart
Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
