Canadian dollar reached C $ 1,1 for the first time in four years. - 22.1.2014

As it was expected, the Japanese Yen (USDJPY) yet remains in a neutral trend. The Bank of Japan has confirmed volumes purchasing government bonds and held the basic parameters of its monetary policy unchanged. We wrote more about this in yesterday report. In its long-term economic forecast, the BOJ expects the higher core CPI at 1.9% in 2015. In our opinion, there is no point to count on any surprises from the Japanese authorities yet. In April, there will be a sale tax increase from 5% to 8%. We believe that the Bank of Japan will take time to estimate the impact of this event on the economy.

Australian Dollar (AUDUSD) appreciated strongly (growth on the chart) after the 4Q inflation data release. In annual terms, it amounted 2.7%, well above the initial forecasts. This reduces the likelihood of further rate cuts in Australia. Now it is 2.5 %.

Canadian Dollar (USDCAD) reached C $ 1.1 per the U.S. dollar for the first time in four years. Today at 15-00 GMT (0), we expect the Bank of Canada meeting to be held. Changes in interest rates are expected. Now it is 1 %. The Bank of Canada can make a number of statements about its steps to improve the economic situation in the country. Now it limits further weakening (growth on the chart) of the Canadian dollar. Over the past four months, it has fallen by almost 8 %. We do not exclude a correction. Forex market participants expect that the Bank of Canada will change its position and give a hint about the likely reduction of the discount rate in the future. Recall that three months ago it saw the opportunity to improve it. Note that tomorrow and Friday in Canada, the significant retail sales and inflation economic data are expected.

Today at 9-30 GMT (0), there are the UK data on the labor market coming out, which may adversely affect the pound (GBPUSD). Besides it, there is the Bank of England statement expected. Recall that it may raise interest rates in the future if the unemployment rate falls below 7%. Today, the change in interest rates issue is not considered.

As it was expected, the Gold (XAUUSD) is correcting down amid predictions of reducing its exports to China this year. An additional negative factor for Gold has been the increased global economic growth forecast from 3.7% by the IMF. Precious metals are traditionally considered as defensive assets in case of an economic downturn.