EUR/USD, CAD, GBP flows: tense few days ahead; Breentry and Albertout getting media attention
Deal could take some days, skirmishes o/n keep things tense
Less immediately, some background media focus on Breentry and Albertout
After Monday’s relief action, Brent off some $7 ½ back below $100 on the Bank holiday, reminder overnight that with neither side hurrying to finalise the details, the path to the final deal remains littered with mines and potential accidents. Oil back up a couple of dollars. With the three parties involved it’s fair to say agreement if it comes will remain inherently fragile. Rubio suggests the deal ‘could take some days’.
Risk all the same net buoyed even with the step back with S&P future at new highs and US10s back to testing 4.5%~ some 18bp off last week’s highs. It has to be taking out the prior recent highs just below the big figure and ideally the recent uptrend to be doing a bit more to be turning recent pressure around. The dollar has been compressing up in a half figure 99-99.50~ range since filling the 7-8 Apr gap and indecision seems likely to continue near-term.
Meanwhile, one side-story to keep an eye on is the Alberta proposed referendum, Carney calling it a ‘dangerous bluff’ and a question it was ‘not helpful’ to ask. He knows all about that first hand from the UK of course. So, a narrative for coming months to keep an eye on is “Breentry” versus Albertout (or Wexit). Latest polling has 60% voting to stay in Canada and 67% no in any eventual binding referendum. But, as Carney notes, accidents happen, especially when external forces and special interests get involved in the dark arts and social media machinery.