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27 Mar 2015
USD/CAD set to push towards 1.19 levels in the next few weeks – TDS
FXStreet (Barcelona) - With Poloz‘s speech signalling that BoC might remain on hold, CAD is set to bounce higher, hence FX Strategists at TD Securities predict that a lower move towards 1.19 is possible for USD/CAD in the coming few weeks.
Key Quotes
“With expectations of a follow-up rate cut diminishing and oil prices firmer, the stage still looks set for a bounce in the CAD, even as the USD is showing signs of gaining again versus the EUR.”
“Spreads at the short end and in the belly of the curve (2s, 5s) have narrowed sharply in the past month, giving back around 20bps of the US yield premium that accumulated at the start of the year; all else remaining equal, this is a strong source of support for the CAD, especially with crude prices steadier."
“We still think there is a compelling case for a push back to the upper 1.23 area—and below potentially—in the next few weeks and that is right where our FV model suggests spot should be this morning—fundamental equilibrium estimated at 1.2381—this is the lowest reading from our model since earlier February and the lower trend in estimated FV clearly suggests something of a change in the CAD’s fortunes in recent weeks.”
“Chart-wise, USDCAD is easing off the overnight highs as our session gets underway, suggesting a minor peak on the intraday chart may be forming.”
“We still think that technical pointers from last week’s sharp turn lower indicate the strong potential for more losses—a push under 1.2360 to the low 1.19s in the next few weeks.”
Key Quotes
“With expectations of a follow-up rate cut diminishing and oil prices firmer, the stage still looks set for a bounce in the CAD, even as the USD is showing signs of gaining again versus the EUR.”
“Spreads at the short end and in the belly of the curve (2s, 5s) have narrowed sharply in the past month, giving back around 20bps of the US yield premium that accumulated at the start of the year; all else remaining equal, this is a strong source of support for the CAD, especially with crude prices steadier."
“We still think there is a compelling case for a push back to the upper 1.23 area—and below potentially—in the next few weeks and that is right where our FV model suggests spot should be this morning—fundamental equilibrium estimated at 1.2381—this is the lowest reading from our model since earlier February and the lower trend in estimated FV clearly suggests something of a change in the CAD’s fortunes in recent weeks.”
“Chart-wise, USDCAD is easing off the overnight highs as our session gets underway, suggesting a minor peak on the intraday chart may be forming.”
“We still think that technical pointers from last week’s sharp turn lower indicate the strong potential for more losses—a push under 1.2360 to the low 1.19s in the next few weeks.”