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26 Jan 2015
USD/CAD may move towards 1.30 in the next few weeks – TDS
FXStreet (Barcelona) - Shaun Osborne, Chief FX Strategist, at TD Securities, feels that the recovery prospects for CAD look meek this stage and USD/CAD will likely move towards 1.30 levels in the coming few weeks.
Key Quotes
“Soft commodities and wider US-Canada spreads are kryptonite for the CAD and our fundamental equilibrium model for USDCAD suggests that this morning’s push up to marginal new highs for this move are fully-supported by developments in the rates and commodity space.”
“There is very little prospect of a meaningful recovery in the CAD at this stage, in other words, and we continue to view the most likely development as a push towards 1.30 in the next few weeks. EURCAD and GBPCAD flows have turned a little more supportive for USDCAD today so far but we retain a broadly negative view of the EUR outlook and, if anything slows USDCAD’s ascent, it may well be cross flows in the next few weeks.”
“On the charts, the USD’s rise remains well-entrenched overall and we remain bullish. But the move up is looking quite extended and the risk of a technical correction cannot be under-estimated; whether that means a marked decline in the USD or an extended move sideways in funds remains to be seen, however.”
“Near-term, we still think there is a risk of a correction to fill the 1.2145/1.2245 gap on the short-term chart but we also expect solid support to emerge on dips to the mid 1.21 area.”
Key Quotes
“Soft commodities and wider US-Canada spreads are kryptonite for the CAD and our fundamental equilibrium model for USDCAD suggests that this morning’s push up to marginal new highs for this move are fully-supported by developments in the rates and commodity space.”
“There is very little prospect of a meaningful recovery in the CAD at this stage, in other words, and we continue to view the most likely development as a push towards 1.30 in the next few weeks. EURCAD and GBPCAD flows have turned a little more supportive for USDCAD today so far but we retain a broadly negative view of the EUR outlook and, if anything slows USDCAD’s ascent, it may well be cross flows in the next few weeks.”
“On the charts, the USD’s rise remains well-entrenched overall and we remain bullish. But the move up is looking quite extended and the risk of a technical correction cannot be under-estimated; whether that means a marked decline in the USD or an extended move sideways in funds remains to be seen, however.”
“Near-term, we still think there is a risk of a correction to fill the 1.2145/1.2245 gap on the short-term chart but we also expect solid support to emerge on dips to the mid 1.21 area.”