22 Aug 2013
USD/CAD capped 1.0518
FXstreet.com (Barcelona) - USD/CAD has been capped at 1.0518 and currently prints sub 1.0500 handle.
USD/CAD is trying to recover from a drop below 1.0500 and is oscillating in the 1.0490’s. Research teams at TD Securities said, “The broader USD undertone remains constructive in the post FOMC minutes environment. Longer-term rates are edging higher (US 10-year yields north of 2.90%) but we rather think that short-term rate (differentials) need to move more obviously in the USD’s favour to sustain and extend these gains. Continued pressure on EM FX and equities may add a modest flight to liquidity bid to the USD and still risks spilling over into the G-10 FX space as the heavy drain on EM central bank USD reserves may entail some rebalancing of reserve holdings (sales of currencies). The FT reports this morning that EM central banks’ FX reserves dropped USD81bn in May, well before the latest flare up of tensions in Asia and Latin America. The USD/CAD rally extended nicely yesterday, taking funds through the mid 1.04 resistance zone, reflecting the broadly better bid big dollar. Chatter through the overnight market has centered on heavy selling interest around and a little above 1.05. Today, a combination of firm US weekly claims, housing and preliminary PMI data might contrast with the expected softening in Canadian retail sales growth in June after the outsized rally in May to give USD/CAD a shout a testing the 1.0510/20 area (and pushing on to 1.0550). TD’s forecast (-0.2% m/m) is a little above the market but the risks around the outcome appear to be geared to the downside (see over for details). Canadian CPI data is out tomorrow morning”.
USD/CAD supported
The teams at TD Securities continued to say, “From a technical point of view, USD/CAD looks well supported now above the 1.044050 area (key support). Trend momentum is strong, so expect limited downside. Target remains 1.0600/50”.
USD/CAD is trying to recover from a drop below 1.0500 and is oscillating in the 1.0490’s. Research teams at TD Securities said, “The broader USD undertone remains constructive in the post FOMC minutes environment. Longer-term rates are edging higher (US 10-year yields north of 2.90%) but we rather think that short-term rate (differentials) need to move more obviously in the USD’s favour to sustain and extend these gains. Continued pressure on EM FX and equities may add a modest flight to liquidity bid to the USD and still risks spilling over into the G-10 FX space as the heavy drain on EM central bank USD reserves may entail some rebalancing of reserve holdings (sales of currencies). The FT reports this morning that EM central banks’ FX reserves dropped USD81bn in May, well before the latest flare up of tensions in Asia and Latin America. The USD/CAD rally extended nicely yesterday, taking funds through the mid 1.04 resistance zone, reflecting the broadly better bid big dollar. Chatter through the overnight market has centered on heavy selling interest around and a little above 1.05. Today, a combination of firm US weekly claims, housing and preliminary PMI data might contrast with the expected softening in Canadian retail sales growth in June after the outsized rally in May to give USD/CAD a shout a testing the 1.0510/20 area (and pushing on to 1.0550). TD’s forecast (-0.2% m/m) is a little above the market but the risks around the outcome appear to be geared to the downside (see over for details). Canadian CPI data is out tomorrow morning”.
USD/CAD supported
The teams at TD Securities continued to say, “From a technical point of view, USD/CAD looks well supported now above the 1.044050 area (key support). Trend momentum is strong, so expect limited downside. Target remains 1.0600/50”.