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Dollar mixed against G10 peers, Brexit negotiations progress

Posted on: June 20, 2017

Oil weakness is the catalyst in the Canadian dollar and Mexican Peso this morning, breaking back below $44 at its lowest level in over 6 months. Supply still remains the concern, with Libya announcing outputs reaching a 4-year high. GBPUSD is selling off as Mark Carney said that inflation pressure was subdued and it was not time for a rate hike, which was far from consensus at the Bank of England.

Data from the Canadian economy has shown a clear improvement; however, oil prices continue to trade near range lows and mute CAD as a result. For USD/CAD short term technical to watch includes support at 1.3210/20 and resistance around 1.3310/20. The day is fairly light on data, so we will have continue to watch oil and other macro news for the pair. In US data, current-account deficit rose 2.5% to $116.8 billion in Q1, making the US a net debtor which is no surprise. While this figure missed expectations of $122 billion, it is unlikely to receive much coverage and action outside of the economic profession. USDCAD should continue to be supported by comments from Fed Presidents Dudley and Evans, along with three other Fed presidents due to speak today.

Cable is facing weakness, more than reversing the gains seen from last week’s BoE MPC meeting where there was an unexpectedly tight 5-3 vote to hold borrowing costs. Further adding to the downside, S&P issued a warning on the UK’s sovereign credit rating and indicated that they could downgrade Britain’s credit rating even before terms of the Brexit deal are finalized – which looks likely. On the Brexit note, negotiations officially kicked off yesterday in Brussels with the first stage focusing on the UK’s exit proceedings. By October 2017, the principles of the divorce should be fulfilled and both regions should ideally work towards securing a future partnership.

  • Yesterday NA Range 1.3191 – 1.3258
  • Asia Overnight 1.3204 – 1.3229
  • London 1.3211 – 1.3284


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