3 Feb 2014
Flash: USD/CAD risk for 1.0900 area - TD Securities
FXStreet (Guatemala) - Shaun Osbourne, Chief FX Strategist at TD Securities noyted the price action and technicals around USD/CAD.
Key Quotes:
"USDCAD pushed through 1.12 Friday then spent the rest of the session back-pedaling as CAD shorts covered and the markets got wind of the release of the US State Department’s review of the environmental impact of the XL pipeline proposal. The report raised no significant objections to the project—similar to last August’s report, however, and a consultation period now follows."
"It remains to be seen how quickly a definitive US position on the pipeline emerges but developments can be viewed as a modest plus for the CAD. Progress on XL is a positive for the CAD but is does nothing to alter the recent drivers of CAD weakness—softer domestic data, low inflation in particular and the BoC leaning dovish."
"So where now? Friday was a poor session for funds and the markets have backtracked a little further so far today. Technically, the sell-off signaled a short-term peak and reversal (at least) in the bull trend (bearish key reversal day) but we recall that, since September, USDCAD corrections have been shallow and short-lived. Friday and today’s session represent the biggest high/low dip in USDCAD since early September."
"There is a risk of more corrective movement near-term towards the 1.09 area potentially, providing EM FX remains relatively calm this week and especially if Canadian jobs data Friday rebound strongly from the weak December report."
Key Quotes:
"USDCAD pushed through 1.12 Friday then spent the rest of the session back-pedaling as CAD shorts covered and the markets got wind of the release of the US State Department’s review of the environmental impact of the XL pipeline proposal. The report raised no significant objections to the project—similar to last August’s report, however, and a consultation period now follows."
"It remains to be seen how quickly a definitive US position on the pipeline emerges but developments can be viewed as a modest plus for the CAD. Progress on XL is a positive for the CAD but is does nothing to alter the recent drivers of CAD weakness—softer domestic data, low inflation in particular and the BoC leaning dovish."
"So where now? Friday was a poor session for funds and the markets have backtracked a little further so far today. Technically, the sell-off signaled a short-term peak and reversal (at least) in the bull trend (bearish key reversal day) but we recall that, since September, USDCAD corrections have been shallow and short-lived. Friday and today’s session represent the biggest high/low dip in USDCAD since early September."
"There is a risk of more corrective movement near-term towards the 1.09 area potentially, providing EM FX remains relatively calm this week and especially if Canadian jobs data Friday rebound strongly from the weak December report."