24 Aug 2015
USD/CAD: Looking constructive Again - TDS
FXStreet (Mumbai) - Analysts at TD Securities believe that USD/CAD heads higher again, although doesn’t see a break through the post-July 15 BoC cut consolidation range.
Key Quotes:
“Despite the heavy tone in the USD and Friday’s data deluge which was as expected for CPI but more constructive on retail sales did little to alter price action for USDCAD.”
“Instead, it was a dip in oil prices to sub-$40/bbl that acted as the catalyst to renew a bid in USDCAD to fresh cycle highs."
“With WTI currently trading sub $39/bbl, price action in funds looks constructive but we would note that the sensitivity between oil prices and USDCAD tends to be softer around these levels.”
“ And, if oil does snap back it does leave USDCAD expose to the downside. That said, we do not see a major break out of the post-July 15 BoC cut consolidation range just yet, though we remain quite bearish the CAD over the medium-term as the economy is in a technical recession and is in the early stages of the terms of trade shock. As such, we view additional Bank of Canada easing as a nontrivial risk.”
“There is no major data in Canada or in the US, so USDCAD will take its tone from broader market dynamics which has been in risk-off mode since the FOMC minutes.”
“Our daily fair value estimate from Friday’s close sits well below spot around 1.3110, which is partially the reason why we are reluctant to chase funds higher from here without an adequate macro-catalyst today. “
“The calendar is rather quiet in Canada through the rest of the week but US data will be just as important.”
“Durable goods will be the key data release to monitor but Jackson Hole’s Symposium begins on the 27th and runs through the 29th will be the major event risk we think.”
Key Quotes:
“Despite the heavy tone in the USD and Friday’s data deluge which was as expected for CPI but more constructive on retail sales did little to alter price action for USDCAD.”
“Instead, it was a dip in oil prices to sub-$40/bbl that acted as the catalyst to renew a bid in USDCAD to fresh cycle highs."
“With WTI currently trading sub $39/bbl, price action in funds looks constructive but we would note that the sensitivity between oil prices and USDCAD tends to be softer around these levels.”
“ And, if oil does snap back it does leave USDCAD expose to the downside. That said, we do not see a major break out of the post-July 15 BoC cut consolidation range just yet, though we remain quite bearish the CAD over the medium-term as the economy is in a technical recession and is in the early stages of the terms of trade shock. As such, we view additional Bank of Canada easing as a nontrivial risk.”
“There is no major data in Canada or in the US, so USDCAD will take its tone from broader market dynamics which has been in risk-off mode since the FOMC minutes.”
“Our daily fair value estimate from Friday’s close sits well below spot around 1.3110, which is partially the reason why we are reluctant to chase funds higher from here without an adequate macro-catalyst today. “
“The calendar is rather quiet in Canada through the rest of the week but US data will be just as important.”
“Durable goods will be the key data release to monitor but Jackson Hole’s Symposium begins on the 27th and runs through the 29th will be the major event risk we think.”