Back
13 Feb 2014
Flash: London’s flip from risk on session - BMO
FXStreet (Guatemala) - Stephen Gallo, European Head of Currency Strategy at BMO Capital explained that this morning’s London activity marked a decisive ‘flip’ from yesterday’s ‘risk-on’ tone, although there did not seem to be one single factor.
Key Quotes:
" Price action in a few of the majors like EUR/USD, GBP/USD and USD/JPY suggested poor liquidity was one factor."
"The weak Australian employment figures were also a factor, as it probably created bigger questions over the reliability of yesterday’s Chinese trade data. Real money buying in USTs and USD weakness also suggest that a weak US retail sales print for January is partially ‘in the price’ already."
"USD/CAD’s tone was on the weak side again, but the pair continued to hover in some very tight ranges. The door feels like it is firmly open to a test of the 1.095-1.097 range, but [very weak] retail sales will need to act as a catalyst, and neither price action nor technicals suggest that there is much scope for a sharp move lower at this stage. In any case, we expect decent bids into 1.095, and neither topside nor downside momentum appear like they will be easy to achieve in this somewhat ‘confused’ environment."
"We look for minimal topside potential above 1.100 in front of 0830’s US retail sales report. Our economists are expecting a +0.1% MoM print in total, and we suspect USD/CAD is already ‘prepared’ for something like flat or -0.1% at most."
"Technicals and price action don’t look like they currently support the case for a ‘break out’ in either direction just yet. For our medium-term CAD bearish stance, we also still need to see confirmation of closes above 1.098 in order to have more confidence, and a move back to 1.102 would still be helpful if we are to take the focus off a possible move to 1.095."
Key Quotes:
" Price action in a few of the majors like EUR/USD, GBP/USD and USD/JPY suggested poor liquidity was one factor."
"The weak Australian employment figures were also a factor, as it probably created bigger questions over the reliability of yesterday’s Chinese trade data. Real money buying in USTs and USD weakness also suggest that a weak US retail sales print for January is partially ‘in the price’ already."
"USD/CAD’s tone was on the weak side again, but the pair continued to hover in some very tight ranges. The door feels like it is firmly open to a test of the 1.095-1.097 range, but [very weak] retail sales will need to act as a catalyst, and neither price action nor technicals suggest that there is much scope for a sharp move lower at this stage. In any case, we expect decent bids into 1.095, and neither topside nor downside momentum appear like they will be easy to achieve in this somewhat ‘confused’ environment."
"We look for minimal topside potential above 1.100 in front of 0830’s US retail sales report. Our economists are expecting a +0.1% MoM print in total, and we suspect USD/CAD is already ‘prepared’ for something like flat or -0.1% at most."
"Technicals and price action don’t look like they currently support the case for a ‘break out’ in either direction just yet. For our medium-term CAD bearish stance, we also still need to see confirmation of closes above 1.098 in order to have more confidence, and a move back to 1.102 would still be helpful if we are to take the focus off a possible move to 1.095."