16 Jan 2014
USD/CAD’s support in the low 1.09 area; watch long side trade ahead of BoC meeting - TDS
Shaun Osbourne, Chief FX Strategist at TD Securities, commented that despite the recent USD/CAD rejection of the 1.10 area, the rally still has room to run. TDS sees support at low 1.09 area and 1.0880.
Key Quotes:
"The overall trend towards more USD-supportive medium-to-long term bond yields remains intact and very much in USD-supportive territory. Based on fiver-year Canada-US spreads and Canadian terms of trade, we estimate the current “fair value” for USDCAD to be closer to 1.1150."
"USD selling interest and long liquidation pressures may be picking up in response to the USD’s failure to crack 1.10 yesterday but we think this rally still has some room to run before positioning becomes too one-sided and the CAD-negative drivers are fully factored in."
"USDCAD closed offered and well off the highs yesterday—not great price action from a technical point of view. A big net loss today would be a big, negative technical blow for USD but we would also caution that negative technical signals have had little traction over the past few weeks."
"It will take a lot to knock the USD significantly lower at this stage. Intraday, we look for support in the low 1.09 area, stronger at 1.0880. We prefer the long side of the USDCAD trade ahead of next week’s BoC meeting."
Key Quotes:
"The overall trend towards more USD-supportive medium-to-long term bond yields remains intact and very much in USD-supportive territory. Based on fiver-year Canada-US spreads and Canadian terms of trade, we estimate the current “fair value” for USDCAD to be closer to 1.1150."
"USD selling interest and long liquidation pressures may be picking up in response to the USD’s failure to crack 1.10 yesterday but we think this rally still has some room to run before positioning becomes too one-sided and the CAD-negative drivers are fully factored in."
"USDCAD closed offered and well off the highs yesterday—not great price action from a technical point of view. A big net loss today would be a big, negative technical blow for USD but we would also caution that negative technical signals have had little traction over the past few weeks."
"It will take a lot to knock the USD significantly lower at this stage. Intraday, we look for support in the low 1.09 area, stronger at 1.0880. We prefer the long side of the USDCAD trade ahead of next week’s BoC meeting."