6 Feb 2014
Flash: Majors price action - BMO
FXStreet (Guatemala) - Stephen Gallo, European Head of Currency Strategy at BMO Capital notes the price action across the Majors in London.
Key Quotes:
"Price action in the majors was muted during the London morning. This came ahead of two key interest rate decisions a bit later from the BoE and the ECB."
"Equity markets have appeared to trade ‘risk-on’, but most of the G10 space faced very limited ability to track these moves in any given way. This included USD/JPY, where the tone was a bit healthier than yesterday’s, but still muted."
"In EUR/USD, muted price action probably reflected a fairly ‘balanced’ market heading into the ECB, despite the pretty clear risks of a ‘dovish’ outcome. This left EUR/GBP, EUR/AUD and EUR/NZD with limited pressure to depreciate. The AUD was, however, trading firm again, having touched another set of new highs for the week following solid December international trade data overnight."
"USD/CAD price action over the last 12 hours or so has been pretty instructive. Yesterday’s ‘Doji’ saw the pair finish higher after four successive lower closes."
"This probably suggests a more ‘evenly balanced’ market in terms of positioning, following four sessions or so of short CAD covering. Strategically, we are still cautious about putting anything large on though, ahead of key data today and tomorrow."
"Our economists expect a larger trade deficit for December than is expected by the consensus (900mln vs. 650mln consensus). USD/CAD should have no problem trading back above 1.110 later today if the Canadian data come in weaker-than-consensus."
"Opportunistically, weak data today should see fresh CAD shorts re-enter in preparation for a weak CAD employment report tomorrow. Once again, we’ll be a better buyer of dips 1.108-1.110 and above."
"The market is still set to see more short CAD covering on better data, but we look for good bids layered between 1.105 and 1.100 the figure. A more ‘evenly balanced’ market should also tend to restrain downside in USDCAD, leaving downside support generally stronger than topside resistance for now. Positioning is better balanced, but the market would still rather find excuses to enter new CAD shorts than exit existing ones."
Key Quotes:
"Price action in the majors was muted during the London morning. This came ahead of two key interest rate decisions a bit later from the BoE and the ECB."
"Equity markets have appeared to trade ‘risk-on’, but most of the G10 space faced very limited ability to track these moves in any given way. This included USD/JPY, where the tone was a bit healthier than yesterday’s, but still muted."
"In EUR/USD, muted price action probably reflected a fairly ‘balanced’ market heading into the ECB, despite the pretty clear risks of a ‘dovish’ outcome. This left EUR/GBP, EUR/AUD and EUR/NZD with limited pressure to depreciate. The AUD was, however, trading firm again, having touched another set of new highs for the week following solid December international trade data overnight."
"USD/CAD price action over the last 12 hours or so has been pretty instructive. Yesterday’s ‘Doji’ saw the pair finish higher after four successive lower closes."
"This probably suggests a more ‘evenly balanced’ market in terms of positioning, following four sessions or so of short CAD covering. Strategically, we are still cautious about putting anything large on though, ahead of key data today and tomorrow."
"Our economists expect a larger trade deficit for December than is expected by the consensus (900mln vs. 650mln consensus). USD/CAD should have no problem trading back above 1.110 later today if the Canadian data come in weaker-than-consensus."
"Opportunistically, weak data today should see fresh CAD shorts re-enter in preparation for a weak CAD employment report tomorrow. Once again, we’ll be a better buyer of dips 1.108-1.110 and above."
"The market is still set to see more short CAD covering on better data, but we look for good bids layered between 1.105 and 1.100 the figure. A more ‘evenly balanced’ market should also tend to restrain downside in USDCAD, leaving downside support generally stronger than topside resistance for now. Positioning is better balanced, but the market would still rather find excuses to enter new CAD shorts than exit existing ones."