This week will focus on the decisions made by the Bank of Canada and the European Central Bank on their respective monetary policies.
The dilemma is the same that prevails in most economies: When to move towards reducing stimuli.
The Bank of Canada had already started with the implementation of the reduction of economic stimuli by reducing the purchase of bonds. However, before the next general elections on September 20, it is unlikely that they will assume a new adjustment on this policy.
The key month for USDCAD is expected to be October, when the Bank publishes its economic projections for the next few quarters. In this sense, and after obtaining the employment data for this Friday, it is likely that a review and reduction will be made on the purchase of assets in that month.
The Euro Zone is preparing for a turn in monetary policy. Projections suggest that the European Central Bank will announce the reduction in asset purchases in September.
The current one was scheduled to begin tapering off at the end of the first quarter. But the estimates contemplate that the area is headed under two factors. On the one hand, the advances in inoculation levels and, on the other hand, the economic recovery of these countries.
Inflation around 3%, although the Bank claims that it is transitory, follows the progress and expectations regarding the entity’s decision.
However, the aim is for the ECB to implement a gradual reduction in the asset purchase policy.
USDCAD closed the buys between the highs 1.2620 and 1.2630. We expect sellers below 1.26.
EURUSD close sell. We maintain sell at the moment until the revision of monetary policies this Thursday.