Euro Retreats After Hitting a Record High of 1.6019 (page 2 of 2)

The CAD dropped like a hard rock following the rate decision because not only did the BoC cut rates, but they also warned of more to come. Weaker growth domestically, fears of further spillover effects from the US economy as well as tight credit conditions are the central bank's primary concerns.

The only reason why the CAD reversed its move was because of the rise in oil. Sooner or later Canadian fundamentals will come back to the forefront. Retail sales are due for release tomorrow and we expect them to be weak given the sharp decline in wholesale sales. Meanwhile, Australia will be reporting consumer prices. After the hottest producer price growth in 10 years, consumer prices should also follow suit.

Sterling sells off following BoE Announcement
Fresh from yesterday's trading loss, on the back of rising criticism about the Bank of England's (BOE) GBP50 billion swap, the British Pound regained posture against the US Dollar, rallying by 150 pips. In light of the Royal Bank of Scotland's $24 billion sell of shares and the BoE's attempt to increase liquidity in order to boost the ailing housing market, speculations run rampant that the worst is yet to come for the once resilient UK economy.

Today, Finance Minister Alistair Darling is set to meet with key mortgage lenders, in hopes of convincing them to cut costs of home loans and find ways of helping people refinance their mortgages. Investors eagerly await this month's central bank minutes set to release on Wednesday, in hopes of finding a silver lining, in terms of a future rate cut. As the economy trudges along, it remains to be seen what sorts of surprises the government pulls out of its black hat, but it can be assumed that it will be awhile before the UK economy start chugging smoothly.

Japanese Yen holds onto Dollar gains
The Japanese Yen continued its lead against the US Dollar, as investors ushered in positive economic release from the world's second largest economy. Supermarket sales figures rose for the second month in a row, due to rising food costs, causing investors to remain optimistic about future growth prospects.

With Democratic Party Japan pushing for higher minimum wages, and the retention of the gasoline tax cut beyond April, expect consumer spending to recover, which could help Japan revive at a quicker pace than expected. Looking ahead, Merchandise Trade Balance and CPI figures should help the Yen gain against major currencies.