The price action in the majors sits in well-contained ranges, as markets await possible data and monpol catalysts later in the week, according to Mark McCormick, North American Head of FX Strategy at TD Securities.
“The story in the G10 this morning is one of European outperformance led by the scandis. The marginal news flow in Europe has turned a bit more positive, underscoring the recent Brexit developments and the market-friendly outcome in the Swedish elections.”
“The EURUSD has given back its early session rally after marking an intraday high of 1.1644. Still, we note the contraction in the BTP risk premium, reflecting the efforts of Italian officials to calm fears regarding next year's budget.”
“EURUSD HFFV sits at 1.18, implying a roughly 2-sigma discount and buying into dips near the lows of 1.1550.”
“USDCAD HFFV is starting to push higher, reducing the risk premium and favoring dip buying near 1.31.”
“For the rest of the G10, US data alongside the ECB and BoE meetings later this week will set the tone.”
“We continue to note the shift in G10 correlations with the USD tracking equities, not rates, suggesting any convergence in equity story plays into a weaker USD.”
“We like tactically fading AUD's risk premium and would use any dips this week to re-engage longs near 0.71.”
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