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USD Conditions feeding through - BMO Capital Markets

FXStreet (Guatemala) - Before the disappointments in US data, besides the ADP report, Stephen Gallo, European Head of Currency Strategy at BMO Capital had noted that the DXY was trading slightly higher by the end of the London morning, but the broad value of the USD failed to re-test the highs observed on Tuesday.

Key Quotes:

"Consequently, most G10 ranges were pretty tight during the London morning."

"The clear bias in USD price action is upward, however, and weak non-US data, weak commodity prices and the stronger USD are now feeding off one another in a fairly sensitive fashion. At the same time, many G10 pairs including USD/CAD have recent economic dataflow and rate differentials working in favour of the USD."

"USD/CAD was basically trading unchanged from its opening level by the end of the morning just above the 1.1200 mark, after hovering in a very tight 1.1200-1.1220 range during the overnight session. The pair still trades moderately above where its key drivers, including the 2yr & 5yr swap rate differentials predict it should. General USD demand and interest rate differentials have basically worked in tandem to push USD/CAD higher since Monday."

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