17 Dec 2014
Little chance of a CAD rebound for now – TDS
FXStreet (Barcelona) - Shaun Osborne and Martin Schwerdtfeger, FX Strategists at TD Securities, note that absence of domestic data will keep CAD more of a slave to the flows, asset market moves, and external and technical factors than earlier in the week.
Key Quotes
“There is little in the way of fresh news this morning so all we can do is reiterate our viewpoints from earlier in the week to try an discern the broader outlines of the CAD’s direction. Firstly, oil prices remain soggy; our energy colleagues expect nothing more than a “dead cat bounce” in the short run and more pressure on crude through Q1, at which point, the market may bounce.”
“Comments from Kuwait yesterday suggest OPEC members are not pushing for a New Year emergency meeting to discuss prices, even with crude nearing $50.”
“Secondly, short- to medium-term interest rate spreads remain advantageous for the USD and might edge a little wider still today if the Fed delivers on expectations for a signal that policy makers are ready to start thinking—at the very least—about raising rates later in 2015.”
“Market turmoil this week has naturally checked expectations to some degree, but domestic prospects are liable to trump external shocks at this stage. Russia should really not make that much difference to whether the Fed opts to ditch “considerable time” or not.”
“All in, we expect USDCAD to push higher in the days ahead. Spot FV is 1.1830 this morning, based on terms of trade and US-Canada spread regressions. But there is still firm technical resistance on the daily and longer-term charts in the upper 1.16 zone which is blocking USD gains for now.”
“We expect firm support for USDCAD on dips to 1.1600/20 intraday.“
Key Quotes
“There is little in the way of fresh news this morning so all we can do is reiterate our viewpoints from earlier in the week to try an discern the broader outlines of the CAD’s direction. Firstly, oil prices remain soggy; our energy colleagues expect nothing more than a “dead cat bounce” in the short run and more pressure on crude through Q1, at which point, the market may bounce.”
“Comments from Kuwait yesterday suggest OPEC members are not pushing for a New Year emergency meeting to discuss prices, even with crude nearing $50.”
“Secondly, short- to medium-term interest rate spreads remain advantageous for the USD and might edge a little wider still today if the Fed delivers on expectations for a signal that policy makers are ready to start thinking—at the very least—about raising rates later in 2015.”
“Market turmoil this week has naturally checked expectations to some degree, but domestic prospects are liable to trump external shocks at this stage. Russia should really not make that much difference to whether the Fed opts to ditch “considerable time” or not.”
“All in, we expect USDCAD to push higher in the days ahead. Spot FV is 1.1830 this morning, based on terms of trade and US-Canada spread regressions. But there is still firm technical resistance on the daily and longer-term charts in the upper 1.16 zone which is blocking USD gains for now.”
“We expect firm support for USDCAD on dips to 1.1600/20 intraday.“