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Forex Flash: Canada/USD rate spread may erode more – TD Securities

TD Securities analysts say that the CAD’s positive correlation with risk assets has strengthened again in the past few days despite the relatively weak (44%) correlation with the S&P500 on the rolling 22-day study. "The strongest driver or the CAD remains the short-term Canada/US rate spread (softer also but standing at 49% today) which suggests that Canadian data today and tomorrow (Friday’s GDP especially) should have a big influence on the market one way or the other", wrote analysts Shaun Osborne and Greg Moore, pointing to weakening spreads in the past two weeks, currently trading at 8 month lows (76bps). "The trend suggests that markets are preparing for more erosion in Canada’s yield advantage over the US.  That should weigh on the CAD more", they added, eyeing a minor reversal and support at 1.0190/1.0210.

Forex: USD/JPY bouncing off lows, around 92.25/30

After dipping to sub 92.00 levels, the cross has now regained the handle and trading back to the 92.25/30 region, following the lack of direction in the global markets....
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Germany Consumer Price Index (MoM) up to 0.6% in Feb from -0.5% in Jan. (YoY) 1.5% vs. 1.7%.

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