1. Yesterday, the USD gained a bit against the euro, but USD/JPY failed to hold above 114. Investors are cautious to place bets in EUR/USD and USD/JPY as there is plenty of event risk in EU (ECB, Catalonia) and the US (replacement of Yellen, tax reform).
2. The euro added 0.1 percent to $1.1762, though its gains were seen capped ahead of the European Central Bank’s policy meeting on Thursday, where the authority is expected to signal it will take small steps away from its ultra-easy monetary policy.
3. The more important events this week are BoC and ECB meeting, as well as UK and US GDP. Waiting for the key events, traders seem to be spending their time on speculating who will US President Donald Trump nominate for the post of Fed chair. Current Fed chair Janet Yellen is still in the race and would provide status quo stability.
4. Overnight, Asian equity indices are trading marginally stronger despite yesterday’s correction on Wall Street. NZD/USD returned temporary to the 0.70 area as the government wants to raise minimum wages. However, the gains evaporated as the New PM again referred to reforming the Reserve bank objective. NZD/USD trades near 0.6940 and is the weakest currency of the week.
5. Gold prices edged higher on Tuesday, but stayed within sight of the prior session’s two-week lows. The yellow metal recovered from an early decline to register a small gain on Monday as stocks lost some steam after a run to another round of all-time highs.