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11 Jun 2014
CAD is a tough one to call - TD Securities
FXStreet (Guatemala) - Shaun Osbourne, Chief FX Strategist at TD Securities looked into the Canadian dollar and picks it out as a tough one to call.
Key Quotes:
"It’s getting trickier coming up with new things to say when USD/CAD steadfastly refuses to move much at all and there is little in the way of economic data on the calendar to inspire more movement”.
“Funds traded a little softer in the overnight session, with the CAD perhaps catching a leg up from the bid tone to its commodity counterparts, the NZD and the AUD, but the market remains reluctant to extend much below 1.09 at the moment."
"With today’s session devoid of any major data from North America, Governor Poloz’s speaking engagement tomorrow, following the release of the bank’s Financial System Review, is getting some attention. The FSR is usually a low key publication that has never been graced with a press conference after its release."
"The governor’s aim seems to be to elevate the report’s profile, rather than signal any significant increase in threats to the Canadian economy or banking system. But the novelty value of the event—Governor Poloz will share the microphone with newly-minted Senior Deputy Governor Wilkins—ensures a high degree of focus on the event."
"We thought USD/CAD had reached a short-term turning point yesterday with the strong rebound from the 1.0890 area through the European morning session but the limited rebound in our session left the recovery struggling to build positive momentum and the market dumped back to the high 1.08s earlier in the session today."
"We still rather reckon with firm support in the higher 108s underpinning the USD and note that spreads in the belly of the curve (5-year tenor) continue to move in the USD’s favour while commodity prices moderate broadly. We think these two factors combined suggest that the CAD should weaken somewhat—or should at the very least prevent significant CAD gains. Our FV regression model which combines 5-year spreads and Canadian terms of trade suggests USD/CAD FV is 1.1250 currently."
Key Quotes:
"It’s getting trickier coming up with new things to say when USD/CAD steadfastly refuses to move much at all and there is little in the way of economic data on the calendar to inspire more movement”.
“Funds traded a little softer in the overnight session, with the CAD perhaps catching a leg up from the bid tone to its commodity counterparts, the NZD and the AUD, but the market remains reluctant to extend much below 1.09 at the moment."
"With today’s session devoid of any major data from North America, Governor Poloz’s speaking engagement tomorrow, following the release of the bank’s Financial System Review, is getting some attention. The FSR is usually a low key publication that has never been graced with a press conference after its release."
"The governor’s aim seems to be to elevate the report’s profile, rather than signal any significant increase in threats to the Canadian economy or banking system. But the novelty value of the event—Governor Poloz will share the microphone with newly-minted Senior Deputy Governor Wilkins—ensures a high degree of focus on the event."
"We thought USD/CAD had reached a short-term turning point yesterday with the strong rebound from the 1.0890 area through the European morning session but the limited rebound in our session left the recovery struggling to build positive momentum and the market dumped back to the high 1.08s earlier in the session today."
"We still rather reckon with firm support in the higher 108s underpinning the USD and note that spreads in the belly of the curve (5-year tenor) continue to move in the USD’s favour while commodity prices moderate broadly. We think these two factors combined suggest that the CAD should weaken somewhat—or should at the very least prevent significant CAD gains. Our FV regression model which combines 5-year spreads and Canadian terms of trade suggests USD/CAD FV is 1.1250 currently."