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By xemarketanalysis January 17, 2018 1:44 pm
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    XE Market Analysis: Loonie Volatile as Bank of Canada Announces Rate Hike


    • EUR weaker after ECB policymaker’s comments and inflation.
    • GBP hit a fresh high overnight.
    • USD soft despite strong industrial production and housing data.
    • Bitcoin slump continues, and its value is now half of its peak last month.


    The Canadian Dollar saw some wild swings as the Bank of Canada announced it was raising rates as expected to 1.25%. After initially strengthening, it then fell sharply as the statement signaled a very gradual approach to further tightening.


    The Dollar is making small gains against its G10 counterparts, with stronger than expected industrial production data being overshadowed by acrimonious immigration discussions that are complicating efforts to reach a deal on government funding. Lawmakers are working towards a temporary spending fix to keep the government running. 


    The Pound is continuing its recent run and is attempting to break above the 1.3830 resistance level versus the US Dollar, with comments from the EU's Juncker welcoming Britain back into the EU keeping the GBP bulls fed for now. 


    The Euro is trading weaker after ECB “sources” said they are unlikely to drop the pledge to keep buying bonds at next week’s meeting. The ECB’s Villeroy argued that the recent Euro appreciation requires monitoring. Consumer price inflation dipped to 1.4% as expected, and core Eurozone inflation arguably is a better measure of price pressures that rose by 1.1% year-on-year, the same as in November and in October. 


    The Canadian Dollar is down on the day after the Bank of Canada's statement following their rate hike cautioned that NAFTA uncertainties and slow wage growth would mean further hikes will be gradual (see highlight). 


    The Australian Dollar hit a fresh 4-month high versus the USD again as the US Dollar weakness continues. The Aussie ran into resistance at 80 cents but further upside for the pair looks to be the path of least resistance, with the September highs of 81 cents the next key test for the pair. Australian jobs figures for December are due overnight and have been very strong of late.


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