Policy driven market 22-Jan-2015

Last week, SNB announcement about Franc cap removal brought the hugest impact in currency market. However, certain level of surprise have seen in the market for this week.

Canadian Dollar [CAD]
Bank of Canada unexpectedly cut the overnight rate 25bp from 1.0% to 0.75%. CAD has been declined against most of major currencies after the announcement. According to the announcement, plummeting oil price weigh on Canadian economy.

GBPCAD has stayed around 1.82 - 1.83 earlier this week, and now it is around 1.86 though it is less than the peek in this week.

Ref. Bank of Canada cuts key rate to 0.75% as oil plunge takes toll on economy


Danish Krone [DKK]
Danish Krone has been weaken due to the consensus that DKK peg to EUR could be abandoned for ECB announcement. Danish Central Bank responded to ECB announcement, cutting interest rate. EURDKK stays around 7.44, which was 7.43 at the beginning of this week.

Ref. REFILE-UPDATE 2-Danish c. bank intervenes to weaken crown, cools rate cut talk


Euro [EUR]
It was not surprised that ECB announced that they will bring additional QE. However, ECB indicated the monthly purchase for 60 billion euro more than the market consensus 50 billion euro. EUR has been down after the announcement against major currencies.

Ref. 
GLOBAL MARKETS- Shares rise, euro slides as markets cheer ECB QE plan
UPDATE 4-Oil prices above $49 ahead of ECB bond buying move


Sometimes, the surprise by political matters makes financial market more volatile, but it might have been more than expected since last week. Greek election is still ahead, and it may bring further volatility into the market.

While many market events have been driven from European market, unexpected events could come from Asian Pacific market.
Australian dollar is considered as higher than RBA prefers, which the governor of RBA mentioned last month. (RBA boss Glenn Stevens says 75 US cents is ideal level for Aussie dollar)
If Chinese market indicates its slow down clearly, Chinese interest rate could be cut further and Australian economy would be slow down due to their dependence on Chinese economy.