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ECB Draghi speech and Canada CPI eyed - RBS

FXStreet (Bali) - As the RBS FX Strategy Team notes, a speech by ECB President Draghi and Canada CPI will be the key events on Friday.

Key Quotes

"The EU composite PMI in November slipped to a new 2014 low 51.4. ECB President Draghi called the EU growth outlook “increasingly sobering” earlier this week and is due to speak again tomorrow. He will be giving a keynote address at the European Banking Congress conference – a topic is not announced, but the conference title is “Reshaping Europe.” Should his talk discuss the monetary policy outlook, we expect Draghi to repeat key phrases about the dedication to protect the EUR and the unanimous commitment to take more action if needed. Most notable may be if President Draghi gives any further hints, as his colleague Mr. Praet did earlier this week, that the December outlook may be revised down."

"In Canada, CPI inflation for October is released. Domestic data in Canada, particularly employment, have picked up in the past few months. This pickup in domestic data and a still-solid pace of recovery in the US have both likely supported the CAD even as commodity prices have fallen. Headline CPI may fall on an outright basis in October, largely on the back of seasonally adjusted energy prices. Still, on a y/y basis both headline and core CPI are anticipated to remain close to the Bank of Canada’s (BoC) 2.0% target. These developments give the BoC scope to become incrementally less dovish at the December 3rd policy statement, particularly if inflation holds above the midpoint 2.0% target. Still, we think the BoC will see the recent data more as a step in the right direction rather than proof that the economy is recovering faster than forecast. Put another way, the Bank may use language noting they want further evidence of a sustainable recovery in employment and trade performance."

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