30 Apr 2015
USD/CAD longs favoured in the short-term – TDS
FXStreet (Barcelona) - FX Strategists at TD Securities, see upside potential for USD/CAD towards 1.2200/50 area in the short-term.
Key Quotes
“We detect a mild CAD over-valuation in terms of our own assessment of USDCAD fair value currently; our equilibrium estimate this morning stands at 1.2145, leaving spot rates close to 1 standard deviation below this point.”
“We think the stabilization in US-Canada spreads (through the short-end and belly of the curve) is curbing the CAD’s potential to gain further at the moment versus the USD. A period of consolidation may seen after the first real correction in the USDCAD rally since the middle of last year.”
“On the charts, USDCAD broke below retracement support in the upper 1.19s yesterday but closed back above the 1.1990/95 area on the day.”
“Technically, there is a case to make for the USD rejecting the break below retracement support (and averting a further drop to the 1.15/1.17). But we will need more evidence before coming to a firm conclusion.”
“Short-term, we think a rise above 1.2095/00 will be helpful in driving USDCAD back to the 1.2200/50 area; given our expectations for a modest upside surprise in the GDP data today and our FV model signaling more upside scope in funds right now, we think the set up favours short-term longs.”
Key Quotes
“We detect a mild CAD over-valuation in terms of our own assessment of USDCAD fair value currently; our equilibrium estimate this morning stands at 1.2145, leaving spot rates close to 1 standard deviation below this point.”
“We think the stabilization in US-Canada spreads (through the short-end and belly of the curve) is curbing the CAD’s potential to gain further at the moment versus the USD. A period of consolidation may seen after the first real correction in the USDCAD rally since the middle of last year.”
“On the charts, USDCAD broke below retracement support in the upper 1.19s yesterday but closed back above the 1.1990/95 area on the day.”
“Technically, there is a case to make for the USD rejecting the break below retracement support (and averting a further drop to the 1.15/1.17). But we will need more evidence before coming to a firm conclusion.”
“Short-term, we think a rise above 1.2095/00 will be helpful in driving USDCAD back to the 1.2200/50 area; given our expectations for a modest upside surprise in the GDP data today and our FV model signaling more upside scope in funds right now, we think the set up favours short-term longs.”