16 Nov 2015
USDCAD: Risks building for a weaker looney – TDS
FXStreet (Delhi) – Research Team at TDS, thinks that USDCAD is setting up for a challenge of the multi-year high of 1.3457 as a full suite of data is set for Canada this week, much of which we think will print on the soft side.
Key Quotes
“The data dump will begin today with a slew of reports due this morning that will include manufacturing and existing home sales for September and October respectively. Existing home sales will do little to influence market sentiment we think, so the focus should be on manufacturing data.”
“Over the course of the week, we will also receive retail sales and CPI. Greater focus should be placed on the retail measure where we see a significant contraction in both headline and core retail sales activity relative to the market. CPI on the other hand holds less relevance for near-term policy implications as the Bank of Canada has moved away from traditional measures of inflation to less observable metrics (which suggest more benign price pressures).”
“Today will also feature the international transactions in securities data which we will have a keen eye on as the September data may shed some light on USDCAD’s performance in September.”
“Last Friday, Senior Deputy Governor Wilkins spoke on central bank innovation that the market may have over-interpreted its implications. The initial headlines from the speech certainly did provide a dovish feel but a deeper examination of the speech unveiled a swathe of additional BoC research on the impact of unconventional policy.”
“We do not think that the speech and research from the BoC suggests an immediate policy risk but rather should policy need to be eased significantly further from here that there is a better case for implementing negative rates as opposed to asset purchases. We see the BoC sidelined for the foreseeable future and with the Fed expected to begin normalizing policy next month, the currency will do much of the work for the Bank.”
Key Quotes
“The data dump will begin today with a slew of reports due this morning that will include manufacturing and existing home sales for September and October respectively. Existing home sales will do little to influence market sentiment we think, so the focus should be on manufacturing data.”
“Over the course of the week, we will also receive retail sales and CPI. Greater focus should be placed on the retail measure where we see a significant contraction in both headline and core retail sales activity relative to the market. CPI on the other hand holds less relevance for near-term policy implications as the Bank of Canada has moved away from traditional measures of inflation to less observable metrics (which suggest more benign price pressures).”
“Today will also feature the international transactions in securities data which we will have a keen eye on as the September data may shed some light on USDCAD’s performance in September.”
“Last Friday, Senior Deputy Governor Wilkins spoke on central bank innovation that the market may have over-interpreted its implications. The initial headlines from the speech certainly did provide a dovish feel but a deeper examination of the speech unveiled a swathe of additional BoC research on the impact of unconventional policy.”
“We do not think that the speech and research from the BoC suggests an immediate policy risk but rather should policy need to be eased significantly further from here that there is a better case for implementing negative rates as opposed to asset purchases. We see the BoC sidelined for the foreseeable future and with the Fed expected to begin normalizing policy next month, the currency will do much of the work for the Bank.”