5 Feb 2014
Flash: USD/CAD heavy looking to you? - TDS
FXStreet (Guatemala) Shaun Osbourne, Chief FX Strategist at TD Securities notes that USD/CAD is looking heavy.
Key Quotes:
"The air keeps leaking out of USD/CAD, with net losses so far today pointing to a fifth consecutive day of lower closes for funds, the longest losing streak since early December."
"We think the turnaround in the market last Friday signals a short-term peak in the rally in USD/CAD at least. There has been a dearth of domestic data releases in the past few days but that changes with Friday’s employment report. Consensus expectations call for a bounce in jobs last month after the shockingly poor December data, which may give the CAD a further, modest boost."
"That will not alter the underlying dynamics that contributed to the late 2013 sell-off in the CAD through—worryingly low inflation from the BoC’s perspective and the bias towards a dovish policy outlook . We are assuming a bounce in January jobs too but another weak report will put the skids quickly back under the CAD."
"For today, with the CAD is not especially caught up in swinging risk sentiment, the focus will remain on the US data; disappointing data may depress the USD to a degree but we don’t think the softer run of data from the US recently will do anything to affect Fed policy thinking, certainly for the moment. Tapering has started so it really has to finish. Technically, loss of USD/CAD support at 1.1040/45 will target a drop back to the high 1.09s at least."
Key Quotes:
"The air keeps leaking out of USD/CAD, with net losses so far today pointing to a fifth consecutive day of lower closes for funds, the longest losing streak since early December."
"We think the turnaround in the market last Friday signals a short-term peak in the rally in USD/CAD at least. There has been a dearth of domestic data releases in the past few days but that changes with Friday’s employment report. Consensus expectations call for a bounce in jobs last month after the shockingly poor December data, which may give the CAD a further, modest boost."
"That will not alter the underlying dynamics that contributed to the late 2013 sell-off in the CAD through—worryingly low inflation from the BoC’s perspective and the bias towards a dovish policy outlook . We are assuming a bounce in January jobs too but another weak report will put the skids quickly back under the CAD."
"For today, with the CAD is not especially caught up in swinging risk sentiment, the focus will remain on the US data; disappointing data may depress the USD to a degree but we don’t think the softer run of data from the US recently will do anything to affect Fed policy thinking, certainly for the moment. Tapering has started so it really has to finish. Technically, loss of USD/CAD support at 1.1040/45 will target a drop back to the high 1.09s at least."