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Amid a bullish USD environment, the EUR rate is attempting to settle into a range, recently set by persistent stalling into the 1.1500 congestion area.
Yield and interest rate differentials are clearly behind further downside here, but with the rates market pricing in another 37-38bps of hikes from the Fed in 2018, it is no surprise to see some hesitation down at these levels after a 10 cent drop through Q2.
(Video) If US payrolls can't push the USD to new highs, deeper retracement/consolidation more likely. Friday's sees the release of the Jun employment report in the US, and there have been few signs that one or other of strong headline jobs growth and/or a further rise in earnings will not materialise from this. Running close to full employment, the Fed (and others) have been anticipating a feed through into wage growth and along with the tax cuts from the start of the year
The title may sound odd, but in light of the potential mess that the UK government finds itself in, we would argue that Monday was a relatively good day for the Pound given what today's series of events would have done in the past. Fresh from opening up 30 ticks from Friday's close, Cable above 1.3300 tried to push for some better levels before London markets decided it was time call for some restraint. Fast forward to the afternoon and the resignation of Boris Johnson set the cat amongst the pigeons and GBP fell to lows just shy of 1.3200 against the USD, and tested .8900 vs the EUR.
There and have been many weights hanging around the Canadian Dollar's neck lately, with recent oil price gains having finally helped the currency back towards the 1.3100 level against the USD. Domestic disruptions in pipeline have limited some of the benefits of the strong gains as the WTI spread with WCS (West Canadian Select) has remained around the $25-30 area, though absolute levels have risen to offer some benefit.
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