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- What are the main events for today?
It's been kind of a synthetic Sunday in the European session with no data releases and very limited newsflow. The most notable mover has been the Japanese Yen.
The currency appreciated on the back of better than expected Tankan data and some constructive BoJ commentary overnight. The rate hike odds increased to 83%.
The market is now sure that the BoJ is going to deliver a 25 bps rate hike at this week’s monetary policy decision but it’s not expecting the central bank to outhawk the current pricing, which sees the BoJ tightening by 67 bps by the end of next year. The JPY will likely be driven more by the US data than the BoJ decision, unless the central bank decides to surprise the market.
The US dollar, meanwhile, remains weak pretty much across the board after Fed Chair Powell sounded more dovish in his press conference. Still, we have key US data this week that could change the short-term trend, starting tomorrow with the US NFP report.
In the American session, the main highlight will be the Canadian CPI report. The most important data to watch will be the underlying inflation measure, that is the Trimmed Mean CPI Y/Y, which is expected at 2.9% vs 3.0% prior.
The BoC last week held interest rates steady but didn't validate the market's rate hike bets just yet. In fact, the central bank kept a cautious tone and highlighted the weak details in the recent GDP and employment reports despite acknowledging the improvements. The market is still fully pricing a rate hike by the end of 2026.
