Divergent monetary policy to see EUR/USD and EUR/CAD lower – HSBC

The Bank of Canada (BoC) and the Federal Reserve each delivered a hawkish hold in January and signalled a likely rate hike in March. Economists at HSBC believe divergent monetary policy should see EUR/USD and EUR/CAD lower over the near-term.

The EUR to weaken against the USD and CAD

“We believe relative central bank stories or divergent monetary policy should play an important role in FX this year, and this will be a key support for the USD this year.”

“The CAD is likely to see some near-term gains against the EUR, as the European Central Bank (ECB) is likely to remain dovish, in contrast to the hawkish holds in North America.”