17 Feb 2015
USD/CAD downside risks near-term – TDS
FXStreet (Barcelona) - Shaun Osborne, Chief FX Strategist at TD Securities, explain that with USD exhibiting a tendency to fade a little in Q1 and CAD threatening to move up further, USD/CAD might move lower in the near-term.
Key Quotes
“Crude oil prices have improved a little over the long week-end but the shift in commodity prices is not universal—gold and copper, for example, are lower on the day—and we generally feel that the recent strength in crude prices is not sustainable.”
“We also doubt that spreads have shifted significantly against the USD at this point. In fact, the overall backdrop still looks more USD-supportive from our perspective overall.”
“But, as we have noted before, there is a clear tendency for the USD to fade a little Q1 after the usual strong start to the calendar year; the USD may be reflecting these trends broadly at the moment."
"From a technical perspective, we think spot is liable to test key short-term support in the low 1.23 area (1.2330/1.2345—38.2% retracement of the early February rally and 28-day MA respectively) near-term.”
“Recall that there is still the open gap on the short-term charts between 1.2150/1.2250 that was left open after the late January rally in the USD on the BoC rate cut.”
“Below support in the low 1.23s will see spot challenge this area, we think but we would expect more solid support to emerge in this area—the BoC is still liable to cut rates again in March and will have to leave the door open to doing more if the CAD is threatening to move up further.”
Key Quotes
“Crude oil prices have improved a little over the long week-end but the shift in commodity prices is not universal—gold and copper, for example, are lower on the day—and we generally feel that the recent strength in crude prices is not sustainable.”
“We also doubt that spreads have shifted significantly against the USD at this point. In fact, the overall backdrop still looks more USD-supportive from our perspective overall.”
“But, as we have noted before, there is a clear tendency for the USD to fade a little Q1 after the usual strong start to the calendar year; the USD may be reflecting these trends broadly at the moment."
"From a technical perspective, we think spot is liable to test key short-term support in the low 1.23 area (1.2330/1.2345—38.2% retracement of the early February rally and 28-day MA respectively) near-term.”
“Recall that there is still the open gap on the short-term charts between 1.2150/1.2250 that was left open after the late January rally in the USD on the BoC rate cut.”
“Below support in the low 1.23s will see spot challenge this area, we think but we would expect more solid support to emerge in this area—the BoC is still liable to cut rates again in March and will have to leave the door open to doing more if the CAD is threatening to move up further.”