Euro Stabilises After Sell-Off as Markets Await US CPI and Bank of Canada Meeting
The euro is showing signs of a modest recovery following a sharp decline triggered by a strong US employment report and increased demand for safe-haven assets amid escalating geopolitical tensions in the Middle East. Robust Nonfarm Payrolls data confirmed the resilience of the US labour market, allowing the dollar to strengthen against most major peers and reinforcing expectations that the Federal Reserve will maintain a restrictive policy stance.
Investor attention today will be focused on the release of US inflation data. According to forecasts, annual consumer price growth may accelerate to 4.2% from 3.8% previously, while core inflation is expected to rise to 2.9% from 2.8%. Should the figures exceed expectations, markets may once again reassess the outlook for Federal Reserve rate cuts, providing additional support for the US dollar.
Another key event will be the Bank of Canada policy meeting. The central bank is widely expected to leave its benchmark interest rate unchanged at 2.25%, although market participants will be paying close attention to the accompanying statement and policymakers' comments regarding the future path of monetary policy. Any signals pointing towards further easing could weigh on the Canadian dollar and support gains in EUR/CAD.
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