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5 Mar 2014
Flash: Ukrainian tensions likely to keep FX markets on their toes - Danske Bank
FXStreet (Barcelona) - Christin Tuxen, Senior Analyst at Danske Bank notes that with Ukraine-Russia tensions easing yesterday, CHF and JPY have been retreating against notably EUR but FX markets will likely stay alert to any new developments on this front today.
Key Quotes
“But in the absence of further escalation of events in Crimea, currency markets will start to zoom in on the key ECB meeting tomorrow. With some ECB easing already priced in it will be a disappointment (risk of EUR upside) if Draghi does not deliver something.”
“This afternoon watch out for any changes to the Bank of Canada (BoC) statement to come out in relation to the rate decision (most certainly rates will be kept unchanged). Notably the BoC January statement was soft but it did not include an explicit easing bias, but it did however explicitly express concerns over the still overvalued CAD in stating that it remains strong despite recent depreciation.”
“It thus seems evident that the BoC will lag the Fed in scaling back on stimuli. We are not convinced the BoC will go as far as cutting rates but dovish talk could lead the market to start pricing this in to an even greater extent (little priced in terms of easing at present).”
Key Quotes
“But in the absence of further escalation of events in Crimea, currency markets will start to zoom in on the key ECB meeting tomorrow. With some ECB easing already priced in it will be a disappointment (risk of EUR upside) if Draghi does not deliver something.”
“This afternoon watch out for any changes to the Bank of Canada (BoC) statement to come out in relation to the rate decision (most certainly rates will be kept unchanged). Notably the BoC January statement was soft but it did not include an explicit easing bias, but it did however explicitly express concerns over the still overvalued CAD in stating that it remains strong despite recent depreciation.”
“It thus seems evident that the BoC will lag the Fed in scaling back on stimuli. We are not convinced the BoC will go as far as cutting rates but dovish talk could lead the market to start pricing this in to an even greater extent (little priced in terms of easing at present).”