The euro rose strongly during today's trading, after better-than-expected inflation data as well as recent efforts by Italian parties to form a government and avoid snap elections.
The EURUSD rose to its highest level since the beginning of the week at 1.1727, after rising by 1.1% yesterday, its second daily high this year, after hitting a 10-month low on Tuesday at 1.1510.
Inflation in the euro zone accelerated in May after the preliminary reading of the consumer price index rose by 1.9% against expectations of a 1.6% rise following the April reading of 1.2%. The main factor was the sharp rise in oil prices.
On the other hand, a breakthrough on the possibility of forming a new government in Italy to ease fears about snap elections and support the euro to maintain its gains. Concern remains over the likelihood of a trade dispute escalating with the possibility of a US imposing new tariffs on steel and aluminum imported from the EU.
The Bank of Canada kept interest rates unchanged at 1.25% yesterday but hinted the possibility of raising them soon may be at the July meeting, pushing the Canadian dollar higher, which rose against its US counterpart, as USDCAD hit its lowest level in 6 days at 1.2818.
Today, markets are looking for core personal consumption expenditure data in the US, which is favored by the Federal Reserve to measure inflation, which is based on interest rate decisions. It is expected to rise by 1.8% in April.
Also, growth data for the Canadian economy will be released today for the first quarter of 2018, with GDP expected to rise by 1.8% compared to the last quarter of 2017, which rose by 1.7%.
