22 Dec 2014
USD/CAD to range-trade…..for now – TDS
FXStreet (Barcelona) - Shaun Osborne and Martin Schwerdtfeger, FX Strategists at TD Securities feel that the USD/CAD pair might simply be consolidating for now before aiming higher in January.
Key Quotes
“No change in story for the CAD; Friday’s data resulted in the exact opposite of our forecasts—lower than expected inflation and better than expected retail sales—but the one still offset the other and the short-term range trade between the upper 1.15s/upper 1.16s persists.”
“We can still see some divergence between what the technical signals (still somewhat heavy with respect to USDCAD, the more so if daily support at 1.1585 fails) and fundamental drivers (more positive, via USD-supportive spreads and still relatively soft commodities) are saying for the exchange rate but that divergence may persist for a little longer over the holiday period until the market gets back into gear in January.”
“USDCAD may simply be consolidating ahead of another push higher.”
“We still think fundamentals favour a higher USD; the USD looks well-positioned to advance against the majors as growth and policy divergence themes develop through 2015 and we do not think the CAD has fully reflected the recent weakness in commodity prices.“
“Keep in mind that USDCAD over the past couple of years has gotten off to a fast start to the year (rising nearly 5% in January last year and 4% in the first two months of 2013).”
“Low participation in the short CAD trade suggests that speculators might be chasing USDCAD higher again in early 2015.”
Key Quotes
“No change in story for the CAD; Friday’s data resulted in the exact opposite of our forecasts—lower than expected inflation and better than expected retail sales—but the one still offset the other and the short-term range trade between the upper 1.15s/upper 1.16s persists.”
“We can still see some divergence between what the technical signals (still somewhat heavy with respect to USDCAD, the more so if daily support at 1.1585 fails) and fundamental drivers (more positive, via USD-supportive spreads and still relatively soft commodities) are saying for the exchange rate but that divergence may persist for a little longer over the holiday period until the market gets back into gear in January.”
“USDCAD may simply be consolidating ahead of another push higher.”
“We still think fundamentals favour a higher USD; the USD looks well-positioned to advance against the majors as growth and policy divergence themes develop through 2015 and we do not think the CAD has fully reflected the recent weakness in commodity prices.“
“Keep in mind that USDCAD over the past couple of years has gotten off to a fast start to the year (rising nearly 5% in January last year and 4% in the first two months of 2013).”
“Low participation in the short CAD trade suggests that speculators might be chasing USDCAD higher again in early 2015.”