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30 Jun 2014
USD/CAD has modest upside potential - TD Securities
FXStreet (Guatemala) - Shaun Osbourne, Chief FX Strategist at TD Securities notes the conditions surrounding USD/CAD from here and it’s potential for the upside.
Key Quotes
"USD/CAD is opening the start of the week with a rare bid tone; since the early June high around 1.0950, funds has only managed to stage 3 days’ worth of net gains. Last week’s IMM data revealed that CAD positioning was much more neutral now, with net shorts reduced to little more than 5k—the smallest bet against the CAD since October last year."
"Recall that the markets have preferred a net short position in the CAD since late 2012 so unless investors are going to start getting net long CAD, the bulk of the sell-off in funds might have passed and we may have to be a bit more attentive to signs that USD/CAD is starting to steady or reverse—near to where we thought the market might find a bit more support, in the 1.0600/50 range. Motivation for extending the CAD recovery is difficult to imagine."
"We still rather think that the domestic economy is struggling to pick up momentum and that data may generally reflect unspectacular growth. Focus on today’s April GDP report is expected to show a gain of 0.2% which keeps the economy pushing towards a 2.0% growth rate for Q2 overall—not bad but nothing great and nothing that will pull the BoC off the sidelines any time soon."
"On the charts, early gains through minor trend resistance at 1.0671 suggest some modest upside potential for USD/CAD intraday; gains are likely to remain limited to the 1.0690/00 zone, however. USD strength through the 1.0715/50 range in needed to boost recovery prospects near-term"
Key Quotes
"USD/CAD is opening the start of the week with a rare bid tone; since the early June high around 1.0950, funds has only managed to stage 3 days’ worth of net gains. Last week’s IMM data revealed that CAD positioning was much more neutral now, with net shorts reduced to little more than 5k—the smallest bet against the CAD since October last year."
"Recall that the markets have preferred a net short position in the CAD since late 2012 so unless investors are going to start getting net long CAD, the bulk of the sell-off in funds might have passed and we may have to be a bit more attentive to signs that USD/CAD is starting to steady or reverse—near to where we thought the market might find a bit more support, in the 1.0600/50 range. Motivation for extending the CAD recovery is difficult to imagine."
"We still rather think that the domestic economy is struggling to pick up momentum and that data may generally reflect unspectacular growth. Focus on today’s April GDP report is expected to show a gain of 0.2% which keeps the economy pushing towards a 2.0% growth rate for Q2 overall—not bad but nothing great and nothing that will pull the BoC off the sidelines any time soon."
"On the charts, early gains through minor trend resistance at 1.0671 suggest some modest upside potential for USD/CAD intraday; gains are likely to remain limited to the 1.0690/00 zone, however. USD strength through the 1.0715/50 range in needed to boost recovery prospects near-term"