Fade rallies in USD/CAD – TDS

In view of strategists at TD Securities, any occasional bullish attempts in the pair remain opportunities to sell.

Key Quotes

“The BoC is likely to hike in October for the second time in 3 months despite weak inflation, lingering risks to the housing market and elevated household debt. After posting a strong sequence of GDP growth, the Canadian economy will resume to a more normal pace of growth, a nudge above potential (1.5%)”.

“We continue to believe that much of the good economic news is priced into CAD, leaving it vulnerable to a loss growth momentum in H2. Indeed, Canada's NEER is running about 3% above the 1yma while data surprise momentum is starting to retreat. With CAD having overshot the normalization trade, we that any loss of growth momentum will trigger some reversal of the recent strength but look to fade USDCAD rallies”.