FX round-up: More needed on Canada

Sterling and the euro jumped late on Wednesday, after struggling to find much direction over the day, while the Japanese yen's decline continues although at a slower rate.

The Bank of Canada cut its growth forecast late in the day, sending USD/CAD higher.

Two days after the country's Liberal party swept to power the monetary authority lowered its 2016 GDP forecast to 2% from 2.3% and for 2017 to 2.5% from 2.6%.

As the European Central Bank's Thursday announcement and press conference loomed, trading in the single currency turned ever more into a wager as to how obliquely or explicitly bank President Mario Draghi will support further economic stimulus measures.

The Eurozone has been under pressure as the commodity slump hinders its 2% medium-term inflation target.

Nonetheless, the singe currency’s momentum does appear to be upwards, for now.

An encouraging bank credit survey earlier in the week showed credit standards for Eurozone companies eased more than expected in the third quarter.

However, it seemed strategists and traders were reassessing the chances of further stimulus on Wednesday.

Capital Economics said Draghi will have to "all but promise more policy support tomorrow if he is to avoid a sharp rise in the euro" and forecast the ECB will expand QE in December.

And Markus Huber, senior analyst at Peregrine & Black, said: "With Japan flagging and China only slowly stabilising, [ECB President] Draghi might want to act in a pre-emptive manner, after all any measures taken usually take several months sometimes in excess of a year to filter through to the economy."

For the dollar, US oil inventories reported as stronger than expected might recently have been expected to result in a counterpoint move to the dollar.

Trade in the yen saw the Japanese currency slide as trade data raised recessionary concerns but raised hopes of further monetary stimulus from the Bank of Japan.

Following a drop in shipments to China, Japanese exports grew at their slowest pace in over a year in September, according to data from the Ministry of Finance in Tokyo.

Asia's second largest economy sold 6.4bn yen worth of goods last month, for a year-on-year rise of 0.6% in non-seasonally adjusted terms, well short of analysts’ expectations for 3.4-3.8% increase.

With imports even weaker, down 11.1% to 6.5bn yen, the trade surplus was reduced sharply, dropping 88% to 115m yen.

"Japan continues to be exposed to downward pressures as a decline in commodity prices has punished its 2% inflation target for 2016. With the fears of the world’s third largest economy on the brink of a recession, the BoJ may likely expand stimulus measures in the next meeting on the 30th of October," said FXTM analyst Lukman Otunuga.