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Limited action ahead of important events - BMO

FXStreet (Barcelona) - Stephen Gallo, European Head of Currency Strategy at BMO Capital noted that the price action in the G10 space has been limited ahead of more important macro events and releases later in the week.

Key Quotes

"The AUD & the CNH were both better bid, as tensions in Hong Kong began to ease over the weekend. US rates, meanwhile, were flat to lower."

"Relative to 2yr swap rate differentials across the G10 space, the DXY is ‘rich’. But rate differentials at all tenors have generally been USD supportive. The status quo should be maintained at least until the FOMC minutes on Wednesday."

"USD/CAD traded lower over the course of the Asian session and London morning, amidst waning appetite for new long USD positions. Commodity prices including WTI crude have also been experiencing some modest relief following last week’s declines."

"Amongst interest rate differentials, the 2yr swap remains the most important determinant of USD/CAD. This differential moved in favour of USD/CAD on Friday, but it has since given back some of that improvement with the fall in US rates so far today."

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