26 May 2015
USD/CAD vulnerable to a pullback – TDS
FXStreet (Barcelona) - FX Strategists at TD Securities, warn that their fair value estimate for USD/CAD suggests the pair might be vulnerable to a sharp pullback, but any dips will remain a buy.
Key Quotes
“Markets returned from holiday in the mood to buy some USD. This has pushed USDCAD past some key resistance levels (1.2350/60) and we continue to see further upside from here over the next few weeks.”
“We would note however that the rally in funds looks too rich relative to spreads, and our daily fair value model is signaling as such with an estimate around 1.2210.”
“While we are inclined to fade this absolute level it does suggest that funds would be vulnerable to a sharp pullback, which of course, we would look to buy again. Such a shakeout would be healthy in our view and that could come as soon as today with a US data barrage.”.
Key Quotes
“Markets returned from holiday in the mood to buy some USD. This has pushed USDCAD past some key resistance levels (1.2350/60) and we continue to see further upside from here over the next few weeks.”
“We would note however that the rally in funds looks too rich relative to spreads, and our daily fair value model is signaling as such with an estimate around 1.2210.”
“While we are inclined to fade this absolute level it does suggest that funds would be vulnerable to a sharp pullback, which of course, we would look to buy again. Such a shakeout would be healthy in our view and that could come as soon as today with a US data barrage.”.