It was the exception, rather than the rule, that the volatility in the euro yesterday was more down to market positioning that the changing messages through Draghi’s press conference. There were residual expectations for further easing measures, so the initial rally was more to do with covering of short positions. Thereafter, the underlying tone was indicative of a central bank wanting to see how current policies impact the economy but also pushing back against criticism from some member states (particularly Germany) regarding the ECB’s ultra-accommodative policy stance. In the wider picture, what’s noticeable is that the ECB’s policy stance is not driving the single currency through the floor, in part because US short-term rates have also been pressured lower in through most of March and early April. Non-conventional policies have become conventional.
For today, the early focus is with activity data in the Eurozone, with preliminary Eurozone PMI data released at 08:00 GMT. Thereafter, CPI data in Canada is out at 12:30 GMT, where both the core and headline rates are seeing falling from the levels recorded in the February data. Despite the rally seen for most of the year, the CAD remains in fairly firm shape, with another USDCAD low seen this week at 1.2593 this week. As with sterling, this is in part linked to the better risk environment we are currently seeing, together with the on-going recovery of the oil price through the week.