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3 Mar 2014
Flash: Ukraine tensions leading the show - BMO Capital Markets
FXStreet (Guatemala) - Stephen Gallo, European Head of Currency Strategy at BMO Capital explained, "The escalation of Ukraine/Black Sea tensions which appeared late in the NY session on Friday basically spilled over into the whole of the London morning session today. This left a distinct offered tone in government bond yields and Asian & European equities."
Key Quotes:
"The escalation of Ukraine/Black Sea tensions which appeared late in the NY session on Friday basically spilled over into the whole of the London morning session today. This left a distinct offered tone in government bond yields and Asian & European equities."
"European bank shares have suffered sizeable losses so far, and these declines appear to have prevented another peak back above 1.380 in EUR/USD. We should see offers within 1.375-1.380 remain in place until risk aversion declines. GBP/USD should also struggle when it comes to maintaining upside, as the ‘risk-on’ trade in both pairs has been to sell USD."
"Ahead of key data and events from Canada later in the week, the volumes and attention were not, understandably, in USD/CAD this morning. An order to buy EUR/CAD during the middle of the London morning appears to have been responsible for general CAD weakness."
"With the ‘risk-on’ trade in USD/CAD having generally been to buy USDs, we’re expecting ‘risk-off’ and the bid in the oil price to restrain rallies in the pair. We look for near-term offers to emerge between 1.110-1.115, with some technical resistance within that very range. The first support layer remains at 1.1025-1.1050."
"A weak reading in US personal income and personal spending today will be important for the same reason GDP was on Friday. However, given that unexpectedly weak data is likely to fuel more ‘risk-off’, the preferred trade today would be to sell USD/JPY. USD/CAD may also come under some pressure, as weaker US data should weigh on the 5yr/5yr swap rate differential in favour of a weaker USD/CAD."
Key Quotes:
"The escalation of Ukraine/Black Sea tensions which appeared late in the NY session on Friday basically spilled over into the whole of the London morning session today. This left a distinct offered tone in government bond yields and Asian & European equities."
"European bank shares have suffered sizeable losses so far, and these declines appear to have prevented another peak back above 1.380 in EUR/USD. We should see offers within 1.375-1.380 remain in place until risk aversion declines. GBP/USD should also struggle when it comes to maintaining upside, as the ‘risk-on’ trade in both pairs has been to sell USD."
"Ahead of key data and events from Canada later in the week, the volumes and attention were not, understandably, in USD/CAD this morning. An order to buy EUR/CAD during the middle of the London morning appears to have been responsible for general CAD weakness."
"With the ‘risk-on’ trade in USD/CAD having generally been to buy USDs, we’re expecting ‘risk-off’ and the bid in the oil price to restrain rallies in the pair. We look for near-term offers to emerge between 1.110-1.115, with some technical resistance within that very range. The first support layer remains at 1.1025-1.1050."
"A weak reading in US personal income and personal spending today will be important for the same reason GDP was on Friday. However, given that unexpectedly weak data is likely to fuel more ‘risk-off’, the preferred trade today would be to sell USD/JPY. USD/CAD may also come under some pressure, as weaker US data should weigh on the 5yr/5yr swap rate differential in favour of a weaker USD/CAD."