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Forex Flash: USD/CAD aims higher with BoC on Wednesday – TD Securities

TD Securities analysts expect a busy week, with employment reports in Canada and the US and central bank meetings (the BoC FAD is Wednesday): “The BoC will keep policy on hold.  We see a small, but not insignificant, risk that the BoC further moderates its language in the wake of the softer economic data trends (growth and inflation) evident through the latter part of last year, however.  US-Canada spread compression continues at the short end of the curve as BoC rate hike risks are slowly erased (the 2-year gap has dropped to 70 bps today, from a 95bps premium for Canadian 2-year bonds in the middle of January)”, wrote analysts Shaun Osborne and Greg Moore. “Still, we think a further moderation in the BoC language would undercut a soft-looking CAD a little more still”, they added.

Technically, analysts see a strong USD/CAD but with late-day high possibly capping the market in the near-term. "We see firm support on dips to the mid/upper 1.02 area", wrote TD Securities analysts, expecting an eventual push to 1.0450 at least in the next few weeks.

Fundamental Afternoon Wrap: Europe and UK in focus as global flash points dim

A slow afternoon for institutional research shows that the Euro and the Pound have fallen in focus, with much attention being put on the pending central bank meetings this Friday. Opinion seems to be split on what action will be taken, if any, while Japanese and US issues look to have been swept under the carpet for the afternoon at least.
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New election might be called if Italy’s political gridlock continues

As the Eurogroup meeting kicks off in Brussels fresh information on the post-electoral turmoil in Italy is hitting the wires. Center-left leader Pier Luigi Bersani imposed an ultimatum on the head of the 5-Star Movement Beppe Grillo, saying that unless he backs a temporary government, a new election would be called.
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