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					The Euro posted strong gains against the US dollar through the European session
(0.57%) due to smooth Spanish T-bill auction and better-than-expected German
ZEW Economic Sentiment. Moody’s downgraded Dexia Credit Local’s long-term
senior debt and deposit ratings to Baa2 with a negative outlook. EUR/USD was
unfazed by the downgrade but do not be surprised if european traders refrain
from buying the european currency. Focus today will be on the US unemployment
claims at 12:30 GMT.

CAD Following The Interest Rate Announcement
Focus then shifted to the Bank of Canada (BOC) interest rate announcement,
which remained level at 1.00%. However, a more hawkish tone was noted in the
BOC rate statement:

“In light of reduced slack in the economy and firmer underlying inflation, some
modest withdrawal of the present considerable monetary policy stimulus may
become appropriate.”

USD/CAD shed 0.90% within a couple of hours as withdrawing ‘considerable
monetary policy stimulus’ suggests that the BOC are considering raising the rates
in the near future. USD/CAD has broken out its daily support as a result and any
rallies in the pair could be met by a decent selling pressure around 0.9920




Mergers & Acquisitions
There are several mergers & acquisitions (M&A) that could affect the FX lows in
certain currencies. Pfizer (US firm) is close to selling its infant-nutrition business
to Nestle (Swiss firm) for at least $9 billion. If the deal is sealed, Nestle could be
converting CHF into USD to pay Pfizer, which may lead to substantial gains in
USD/CHF.

Alimentation Couch Tard Inc (US firm) made a recommended cash offer to Statoli
Fuel and Retail (Norwegian firm) for US $2.77 billion. Likewise, FX traders will
pay close attention to USD/NOK as if the takeover is completed, NOK will be sold
and USD will be bought, which could lead to sharp gains in USD/NOK.

				
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