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Forex pairs in this Article » EUR/USD (London) - Markets in general and including FX were far less choppy overnight than they had been at the very start of the week, said Stephen Gallo at BMO.

He went on to say that overall fluctuations in the FX space were mixed, with no clear direction. He suspects that month-end/quarter-end flows are beginning to set in, hence the lack of any clear tone within FX this morning. Moreover, he said, the mixed tone facing the USD may have, in part, been a result of the weakness in precious metals prices but without any bid in US yields to correspond.

It is not clear to him, therefore, that FX markets were expressing a view on US monetary policy this morning by selling EUR/USD, although we do suspect that concerns regarding financial sector stability in Europe are beginning to gradually show up in the EUR cross rates. As month-end and quarter-end approach, he views the current environment as likely to be more supportive of “risk-on”, although, to one degree or another, a second or third leg higher in core sovereign rates and European or Chinese financial instability could be offsetting factors, and ones that we cannot completely rule out
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