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Major News This Week : October 07, 2013

ByThe National Bank of Canada
Published 10/08/2013, 07:43 AM
Updated 05/14/2017, 06:45 AM

Much as was the case for the last few months, unfolding events in the U.S. have captured our attention, although this time it has not been the Federal Reserve influencing markets, but rather the recent conflicts in Washington. The U.S. government shut its doors last week, and the Republicans and Democrats have yet to reach an agreement that could pry them back open. The most likely scenario is that the politicians will put off the problem by raising the debt ceiling. The euro continued to gain strength as Mario Draghi, the President of the European Central Bank, declared that the eurozone economy was still fragile and the Bank would maintain its policy of monetary easing. On Friday the euro was trading 400 basis points higher than in September. Have a good week!
Forecast Previous
The Loonie
“The optimist sees the rose and not its thorns; the pessimist stares at the thorns, oblivious of the rose.” Kahlil Gibran

The euro moved up significantly this week, approaching its peak of last February by almost 65 basis points, representing a two-year high against the greenback. Clearly the problems in Washington over the last few days have something to do with it, but it would appear that the trend began in the middle of the summer, long before the political wrangling in the U.S. became apparent. The rally in the EUR/USD since July has been nothing short of a remarkable turn of events. The figure was below 1.2800, which was just above its lowest level for the year, when the wind suddenly changed direction, carrying the pair over 1.3600 this week.

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