18 Jul 2014
USD/CAD is looking cheap here -TD Securities
FXStreet (Guatemala) - Shaun Osbourne, Chief FX Strategist at TD Securities explained that overall they think the fundamental outlook for the CAD remains challenging.
Key Quotes:
“The long-awaited (and still absent) rotation away from domestic demand-led growth to more balanced expansion supported by trade and investment still looks very distant."
"A new report from the CD Howe Institute yesterday highlighted that Canada was lagging behind its OECD peers broadly and the US specifically (by a margin of around 30%) in business investment this year. This is a negative for Canadian productivity but it also suggests that alternative growth drivers may not be up to the job the BoC expects of them at the moment."
"Technically, we think the USD/CAD correction from the 1.12+ levels has run its course. Price action over the past week has been constructive—bullish daily and weekly reversal signals—and we would prefer a firm close on the week to bolster the improving technical outlook—and strengthening bullish momentum on the shorter-term studies at least. If the CPI data disappoint as we expect, the USD may take a run at resistance in the low 1.08 area and a move above here should trigger more gains in the days and weeks ahead."
"With IMM data last week highlighting the fact that CAD positioning now is much more neutral and we see no reason for investors to consider getting net long CAD at this point, we rather think the market should favour buying USD/CAD at these levels, we certainly do."
Key Quotes:
“The long-awaited (and still absent) rotation away from domestic demand-led growth to more balanced expansion supported by trade and investment still looks very distant."
"A new report from the CD Howe Institute yesterday highlighted that Canada was lagging behind its OECD peers broadly and the US specifically (by a margin of around 30%) in business investment this year. This is a negative for Canadian productivity but it also suggests that alternative growth drivers may not be up to the job the BoC expects of them at the moment."
"Technically, we think the USD/CAD correction from the 1.12+ levels has run its course. Price action over the past week has been constructive—bullish daily and weekly reversal signals—and we would prefer a firm close on the week to bolster the improving technical outlook—and strengthening bullish momentum on the shorter-term studies at least. If the CPI data disappoint as we expect, the USD may take a run at resistance in the low 1.08 area and a move above here should trigger more gains in the days and weeks ahead."
"With IMM data last week highlighting the fact that CAD positioning now is much more neutral and we see no reason for investors to consider getting net long CAD at this point, we rather think the market should favour buying USD/CAD at these levels, we certainly do."