The euro climbed higher ahead of the European Central Bank meeting on Thursday, in which policymakers are faced with the challenge of dealing with weak inflation and robust growth.
EUR/USD rose to 1.1943 by the time of writing, still more than 100 pips below last week’s multi-month high of 1.2070. The single currency lost some traction as market participants became increasingly aware that a stronger euro could slow down its plans to taper its bond-buying program.
Yesterday, President Trump struck a deal with Democrats to provide relief money for Hurricane Harvey. The deal extends government funding and the debt limit for 3 months. This deal helped the ever-growing fears surrounding the near-term government shutdown- US stocks rose as a result.
The Canadian dollar rallied yesterday after the Bank of Canada raised its interest rates by 25 basis points to 1 percent. The move came as a surprise to many, and policymakers left the door open to further rate hikes this year. USD/CAD fell to 1.2140 on the news, but recovered to 1.2241 today.
USD/JPY bounced back above 109 to 109.26 overnight, lifted by the rally in share prices. The yen is expected to garner back strength as concerns over North Korea persist.
