19 Dec 2014
Canadian data today may deliver mixed signals on the economy – TDS
FXStreet (Barcelona) - According to Shaun Osborne and Martin Schwerdtfeger, FX Strategists at TD Securities, today’s Canadian data is expected to deliver mixed signals on the economy and will unlikely help to resolve the short-term uncertainty for funds.
Key Quotes
“The market already feels like it is starting to dial it down ahead of the holidays. The CAD ignored a late sell-off in crude oil yesterday—ending the brief consolidation in the market and driving WTI back to a little shy of the mid-week lows—and maintained a somewhat better bid tone versus a generally stronger USD into the close Thursday.”
“USDCAD looks heavy but it really should be moving the other way. It’s hard for us to ignore two—usually—fairly decisive drivers of the CAD’s performance; spreads and commodities. US-Canada 5-year spreads remain elevated (new cycle highs) and soft crude is a clear CAD negative.”
“Our FV estimate for USDCAD based on these variables is tracking obstinately higher (1.1870 today) even as the spot rate is trying to push onto a 1.15 handle.”
“Technically, we can see grounds for a little more softness in USDCAD near-term, with the USD well capped in the upper 1.16s this week. But fundamentally, we see little reason for optimism on the CAD; something will have to give—either spreads and commodities improve in the CAD’s favour or the CAD will shortly be trading at new lows versus the USD.”
“Today’s Canadian data—which we expect to deliver some mixed signals on the economy—is unlikely to help resolve the short-term uncertainty for funds on the basis of our forecasts (see above).”
“Broadly, the numbers should reinforce the trading range that has developed in the past few sessions but our gut feeling is that slippage in USDCAD should remain limited and that minor dips remain a buy.”
Key Quotes
“The market already feels like it is starting to dial it down ahead of the holidays. The CAD ignored a late sell-off in crude oil yesterday—ending the brief consolidation in the market and driving WTI back to a little shy of the mid-week lows—and maintained a somewhat better bid tone versus a generally stronger USD into the close Thursday.”
“USDCAD looks heavy but it really should be moving the other way. It’s hard for us to ignore two—usually—fairly decisive drivers of the CAD’s performance; spreads and commodities. US-Canada 5-year spreads remain elevated (new cycle highs) and soft crude is a clear CAD negative.”
“Our FV estimate for USDCAD based on these variables is tracking obstinately higher (1.1870 today) even as the spot rate is trying to push onto a 1.15 handle.”
“Technically, we can see grounds for a little more softness in USDCAD near-term, with the USD well capped in the upper 1.16s this week. But fundamentally, we see little reason for optimism on the CAD; something will have to give—either spreads and commodities improve in the CAD’s favour or the CAD will shortly be trading at new lows versus the USD.”
“Today’s Canadian data—which we expect to deliver some mixed signals on the economy—is unlikely to help resolve the short-term uncertainty for funds on the basis of our forecasts (see above).”
“Broadly, the numbers should reinforce the trading range that has developed in the past few sessions but our gut feeling is that slippage in USDCAD should remain limited and that minor dips remain a buy.”