23 Dec 2014
Crude weighs, CAD still rangey – TDS
FXStreet (Barcelona) - Analysts at TD Securities note that crude has continued to weigh on the CAD, with the short term trend momentum favouring range-trading and longer-term technicals bullishly positioned.
Key Quotes
“We get some domestic data today but given the data broadside that the US will fire off this morning, there is a risk that the Canadian GDP report will get lost in the mix. That might not be a bad idea; GDP is expected to rise 0.1% in October, leaving the economy about where the BoC thought it would be at this point—but perhaps not yet fully reflecting still the weakness in oil prices seen through Q3. There’s unlikely to be anything in the report to boost the CAD significantly.”
“WTI plunged precipitously from the early Monday peaks and while the market has steadied this morning, the broader picture suggests the market is poised to extend the recent decline further below USD54.50. Nat gas also dipped sharply—9% or so yesterday. So much for the so called “Santabomb” that weather forecasters have warned is on the way.”
“Crude closing on USD50 as the new year gets underway will add to pressure on the CAD; two key variables for USDCAD’s direction—US-Canada spreads and commodity prices—continue to point to significantly higher levels for spot, in our opinion.”
“Our spot FV estimate for USDCAD, based on terms of trade and spread regressions, has edged north of 1.19 this morning.”
“On the charts, USDCAD continues to respect the 1.1575/1.1675 range that has developed over the past week. We spot trend support at 1.1605 on the daily chart and minor resistance at 1.1640.”
“Short-term trend momentum signals favour range-trading but longer-term oscillators remain bullishly positioned, which should help limit USDCAD weakness near-term. We still favour looking to buy USDCAD dips.”
Key Quotes
“We get some domestic data today but given the data broadside that the US will fire off this morning, there is a risk that the Canadian GDP report will get lost in the mix. That might not be a bad idea; GDP is expected to rise 0.1% in October, leaving the economy about where the BoC thought it would be at this point—but perhaps not yet fully reflecting still the weakness in oil prices seen through Q3. There’s unlikely to be anything in the report to boost the CAD significantly.”
“WTI plunged precipitously from the early Monday peaks and while the market has steadied this morning, the broader picture suggests the market is poised to extend the recent decline further below USD54.50. Nat gas also dipped sharply—9% or so yesterday. So much for the so called “Santabomb” that weather forecasters have warned is on the way.”
“Crude closing on USD50 as the new year gets underway will add to pressure on the CAD; two key variables for USDCAD’s direction—US-Canada spreads and commodity prices—continue to point to significantly higher levels for spot, in our opinion.”
“Our spot FV estimate for USDCAD, based on terms of trade and spread regressions, has edged north of 1.19 this morning.”
“On the charts, USDCAD continues to respect the 1.1575/1.1675 range that has developed over the past week. We spot trend support at 1.1605 on the daily chart and minor resistance at 1.1640.”
“Short-term trend momentum signals favour range-trading but longer-term oscillators remain bullishly positioned, which should help limit USDCAD weakness near-term. We still favour looking to buy USDCAD dips.”