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30 Sep 2014
Rate differentials leading the way - BMO
FXStreet (Guatemala) - Stephen Gallo, European Head of Currency Strategy at BMO Capital explained that declines in some of the main European currencies vs. the USD were the main feature of the London morning.
Key Quotes
“The weaker than expected core Euro Area CPI reading in the September Flash Estimate was the primary catalyst for EUR weakness, but the data also seemed to trigger broader demand for the USD as well."
"Rate differentials at the front end of the German and US curves have moved in favour of the USD”.
"At this stage, positioning in USD/CAD is still fairly neutral with a moderate CAD-negative bias”.
“However, the general USD tone of late and USD/CAD’s fundamentals suggest that a 0.0%-0.1% print or less will trigger a break of 1.1200, while the aforementioned support range will be tough to break even if the figure is surprisingly strong."
Key Quotes
“The weaker than expected core Euro Area CPI reading in the September Flash Estimate was the primary catalyst for EUR weakness, but the data also seemed to trigger broader demand for the USD as well."
"Rate differentials at the front end of the German and US curves have moved in favour of the USD”.
"At this stage, positioning in USD/CAD is still fairly neutral with a moderate CAD-negative bias”.
“However, the general USD tone of late and USD/CAD’s fundamentals suggest that a 0.0%-0.1% print or less will trigger a break of 1.1200, while the aforementioned support range will be tough to break even if the figure is surprisingly strong."