27 May 2014
London markets oversight; basing a foundation - BMO Capital Markets
FXStreet (Guatemala) - Stephen Gallo, European Head of Currency Strategy at BMO Capital's explained the London morning was quiet in terms of fundamental drivers and activity in FX.
Key Quotes:
"The GBP was the biggest ‘loser’ amongst the majors during the London morning, but month-end flow, stops and weaker UK data all appeared to be factors behind the very modest decline. With EUR/GBP 2yr swap rate differential still very much in favour of the GBP, EUR/GBP rallies into 0.815 should offer good EUR selling opportunities."
"USD/CAD’s range was very tight during the London morning, but it does appear as if FX investors are looking for opportunities to probe downside in the pair. The better tone in commodity prices, the weak EUR on the crosses, and the lack of significant upside in US yields/data probably make testing for downside look like a viable opportunity for some."
"Our short-term ‘fair value’ currently places USD/CAD just slightly above 1.090, and we also expect large bids in front of 1.080. Consequently, any move lower in Funds should be a very slow grind."
"USD/CAD is still fairly dependent on moves in the US/Canadian 10yr swap rate differential, so FX participants will be looking for evidence that the Q2 bounce back in US activity is progressing. We have a fair bit of April & May data due this week starting with durables at 0830."
"Disregarding month-end flows, today’s US data should start to drive the tone in USD/CAD for the week. Weak reads across the board from the US will start to make 1.0875 resistance feel less achievable in the very near-term."
Key Quotes:
"The GBP was the biggest ‘loser’ amongst the majors during the London morning, but month-end flow, stops and weaker UK data all appeared to be factors behind the very modest decline. With EUR/GBP 2yr swap rate differential still very much in favour of the GBP, EUR/GBP rallies into 0.815 should offer good EUR selling opportunities."
"USD/CAD’s range was very tight during the London morning, but it does appear as if FX investors are looking for opportunities to probe downside in the pair. The better tone in commodity prices, the weak EUR on the crosses, and the lack of significant upside in US yields/data probably make testing for downside look like a viable opportunity for some."
"Our short-term ‘fair value’ currently places USD/CAD just slightly above 1.090, and we also expect large bids in front of 1.080. Consequently, any move lower in Funds should be a very slow grind."
"USD/CAD is still fairly dependent on moves in the US/Canadian 10yr swap rate differential, so FX participants will be looking for evidence that the Q2 bounce back in US activity is progressing. We have a fair bit of April & May data due this week starting with durables at 0830."
"Disregarding month-end flows, today’s US data should start to drive the tone in USD/CAD for the week. Weak reads across the board from the US will start to make 1.0875 resistance feel less achievable in the very near-term."