US Open Note – Dollar struggles ahead of key data; BoC awaited

Dollar waiting for tomorrow’s US CPI data

The US dollar is weaker somewhat today, and Treasury yields were lower as traders wait for the US inflation announcement on Thursday as it may affect the timeline for Federal Reserve discussions on tapering bond purchases and may be a key catalyst for the bond market. Dollar/yen is continuing its selling interest, hovering near 109.37, while the US dollar index is experiencing some losses as well. S&P 500 and Nasdaq futures are signaling a positive open; however, Dow Jones futures are suggesting a negative open.

Euro and pound take some positive steps

The European Central Bank will have a three-day retreat on June 18-20 with a major topic - the strategy review, with issues that started in the previous year and were postponed for most of 2020. The single currency is heading upwards versus the greenback but still hovers beneath the 1.2200 handle ahead of the ECB meeting tomorrow. Pound/dollar found strong support at the 20-period simple moving average (SMA) and is posting a positive session.

Loonie needs some boost but BoC may fail to help

One of the main themes is the BoC monetary policy decision later in the day. After the hawkish tone in the preceding meeting in April, the bank will take things slower and keep policy unchanged at 0.25% as well as the pace of its bond purchases steady. Policymakers also suggested no hikes until 2023 and no one is expecting another hawkish surprise today due to tough lockdowns in Canada’s largest regions. In Ontario, the restrictions ended on Friday and cases have fallen, so there is an optimism for a return to normal days. Though, the labor market has recorded two consecutive months of job losses. This meeting will be difficult to drive the loonie higher. Currently, dollar/loonie is easing around 1.2075, remaining in a strong bearish tendency since March 2020.

Elsewhere, the aussie and the kiwi are moving north with weak momentum against the dollar, while oil prices are advancing above the $70/per barrel, posting a new over two-and-a-half year high at $70.61 earlier. The yellow metal is trading near its opening level, holding beneath $1,900/per ounce.

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