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EUR's runway looks clear to 1.145 - TD Securities

"The carnage in the US equity markets poured into the Asian session, though there has been little spillover into the FX space," point out TD Securities analysts.

Key quotes

"In FX, correlations are changing again and we think the unraveling of risk adjusted performance of US assets has helped to cap the rally in the buck. The relative outperformance of ROW equities against the US has probably helped to insulate high-beta currencies since the midterms."

"We also note that another key thing to watch is the possible shift in the political narrative from Europe to the US. Both groups have their troubles and yet the ebbing of fiscal support alongside the prospects of minimal political cooperation in DC argues that the political risk premium could shift to the USD. A looming shutdown and the Mueller probe intensify these risks."

"We expect recent ranges to hold but like holding short USD exposure into the Fed. The EUR's runway looks clear to 1.145 while a break of 112 opens up a path to 110 in USDJPY. NOK still looks cheap but oil prices aren't doing it any favors. We lean short CAD on the crosses ahead of this week's data dump, noting that CADJPY sits about 2% overvalued on short-term models."

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