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Forex Flash: Growth shocks in US unlikely to trigger downside for CAD – UBS

Canada's key export sectors - manufacturing and energy - are not enjoying the best of demand conditions, and given the heavy exposure to the US, any growth shocks arising from sequestration in the US would be strongly felt by the Canadian labor market. Canada's current account - although at manageable levels - is struggling to recover and this serves as an immediate deterrent to longer-term investors.

As such, “it would probably take more time and data confirmation for such trends to materialize, and we do not expect them to serve as valid triggers for CAD downside on a tactical level.” notes Research Analyst Gareth Berry at UBS.

Forex Flash: USD strengthens against metrics – ANZ

According to the ANZ Research Team, “Our broader view has been to anticipate, as the global economy repaired itself, that the US dollar would stay soft against a range of currencies, particularly those in Asia and the EUR; and for the AUD and NZD to remain at high levels despite stretched valuation metrics.” Against this view, the dollar has strengthened particularly strongly since early February, and against some currencies since early January. Following this, a consensus seems to have emerged that the dollar's strength has been driven by US recovery expectations, and that this strength is likely to persist.
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Forex: EUR/USD clings to 1.3000

The sentiment surrounding the euro remains depressed on Wednesday, although the single currency has managed to leave behind session lows in the area of 1.2985/90 and advance to the region of the 1.3000 handle...
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