FXStreet (Guatemala) - As worth noting, Stephen Gallo, European Head of Currency Strategy at BMO Capital explained that the London morning was characterised by minor ‘risk-off’ due to the new sanctions slapped on Russia late yesterday.
“FX investors initially attempted to take out lower levels in EUR/USD and challenge key trendline support, but some renewed downside pressure in the commodity bloc boosted the EUR on the crosses and that has prevented a further slide in the EUR so far."
"The GBP also appears vulnerable to ‘risk-off’ due to an above average sensitivity to global equities and very stretched positioning. As such, the bid in EUR/GBP (GBP/USD weakness) also prevented further declines in the EUR. The JPY crosses traded softly throughout the morning."
"Before testing 1.0755 just a short while ago, USD/CAD traded in a very narrow range, but within the commodity bloc the CAD is outperforming only the NZD. As our economists have noted, there are some upside risks to their minus 0.1% MoM call for headline CPI due tomorrow."
"Additionally, FX investors may very well have been disappointed by the outcome of yesterday’s BoC. However, we still think any bid in the CAD tomorrow on a hotter CPI print should be sold into."
"Also, any CAD bid should be more limited than it otherwise would have been if the BoC hadn’t downplayed the recent pick-up in inflation yesterday. Of course, a much weaker CPI print will leave a test of 1.0800-1.0825/50 wide open."
"The jobless claims report due at 0830 covers the NFP survey week, and the ‘neutral range’ for the USD is probably something like 300K-325K. Absent a major surprise here, there shouldn’t really be an impetus to take USD/CAD beyond 1.0725-1.0775 today. Within the May international securities flow data for Canada due at 0830, any weakness in the net equity component will suggest that the inflows triggered by the last CAD devaluation have continued to fade."