18 Jun 2014
USD/CAD significantly undervalued - TD Securities
FXStreet (Guatemala) - Shaun Osbourne, Chief FX Strategist at TD Securities, in relation to USD/CAD, explained the market is content to await the outcome of today’s FOMC meeting before deciding on where to take the USD next.
Key Quotes:
"The market is content to await the outcome of today’s FOMC meeting before deciding on where to take the USD next. With US unemployment declining and inflation on the rise, there has been speculation that the outcome of the meeting today will see Fed policy take a more hawkish turn, possibly via an increase in the pace of tapering."
"We think that is unlikely; no changes in the pace of tapering or in the Fed’s forward guidance may see the USD ease modestly in the short run. But if the market has been thinking about the possibility of a more hawkish outcome at today’s meeting, investors have hardly been rushing to price that into the USD over the past week. Scope for USD losses remains fairly limited in an environment where US economic prospects and policy risks look more constructive than much of rest of the G7 we think."
"We see USD/CAD is being anchored in a tight 1.0830/1.0890 range for the moment. No change in the Fed’s message today may see the USD slip back to the lower zone of supported noted above but we see no strong incentive to push the USD significantly lower."
"We consider USD/CAD to be quite significantly undervalued relative to our fair value assessment currently (nearer 1.12). We still rather think modesty USD losses towards the 1.08 area provide better opportunities for USD buyers."
Key Quotes:
"The market is content to await the outcome of today’s FOMC meeting before deciding on where to take the USD next. With US unemployment declining and inflation on the rise, there has been speculation that the outcome of the meeting today will see Fed policy take a more hawkish turn, possibly via an increase in the pace of tapering."
"We think that is unlikely; no changes in the pace of tapering or in the Fed’s forward guidance may see the USD ease modestly in the short run. But if the market has been thinking about the possibility of a more hawkish outcome at today’s meeting, investors have hardly been rushing to price that into the USD over the past week. Scope for USD losses remains fairly limited in an environment where US economic prospects and policy risks look more constructive than much of rest of the G7 we think."
"We see USD/CAD is being anchored in a tight 1.0830/1.0890 range for the moment. No change in the Fed’s message today may see the USD slip back to the lower zone of supported noted above but we see no strong incentive to push the USD significantly lower."
"We consider USD/CAD to be quite significantly undervalued relative to our fair value assessment currently (nearer 1.12). We still rather think modesty USD losses towards the 1.08 area provide better opportunities for USD buyers."