Our expected 1.1025-1.1075 range yesterday was breached on the topside for more than one reason, as is generally the case in FX. We suspect that some F&C-related flow was partially to blame: either ‘real’ or ‘speculative’. Additionally, some participants appear to have been forced out of ‘risk off’, with ‘intervention’ having emerged in more than one place: Turkey, Brazil and India. Three central banks acting at roughly the same time is a considerable force. Downside USDCAD risks have therefore dissipated somewhat over the last 12-24 hours, as nominal long-term US rates and ‘risk appetite’ have become a bit more supportive for the pair. If anything, the improvement in ‘risk appetite’ as some EM currencies have stabilised has been more aggressive than we were expecting.
Read the full report: FX Daily
BMO