15 Jan 2014
Flash: USD/CAD broader trend not complete - TDS
FXstreet.com (Guatemala) - Shaun Osbourne, Chief FX Strategist at TD Securities explained why they are targeting 1.10+ USD/CAD saying the broader trend is not complete.
Key Quotes:
"The BoC’s business outlook survey provided a little respite for the hard-pressed CAD as the data revealed a slight improvement in inflation expectations and only a modest decline in business confidence. The balance of respondents expecting inflation to remain in a 1-2% range (below the BoC’s 2-3% target, in other words) fell by two points in the Q4 survey but, at +68, remained near the Q3 record."
"OIS pricing gave back some of the risk of a BoC rate cut that was priced in last week in response to the weak employment data here, taking the probability of a 25bps ease in Q4 back to the 25% range (from 35% or so Friday) - that remains a significant change of gears on BoC thinking relative to the recent past though. Overall, the economy retains a soft bias and we look for the CAD stay better offered ahead of the BoC policy meeting next week as investors ponder the risk of a further shift in the policy bias."
"USDCAD lost ground yesterday but the market was essentially consolidating (inside range day) and looks to be forming a bull consolidation (triangle) on the short-term charts. Above 1.0910 early here will target another push higher. Key support intraday—though US retail sales—is 1.0850. We still prefer to look for USD buying opportunities. The broader bull trend is not complete and we continue to target 1.10+ as the near-term objective for this move."
Key Quotes:
"The BoC’s business outlook survey provided a little respite for the hard-pressed CAD as the data revealed a slight improvement in inflation expectations and only a modest decline in business confidence. The balance of respondents expecting inflation to remain in a 1-2% range (below the BoC’s 2-3% target, in other words) fell by two points in the Q4 survey but, at +68, remained near the Q3 record."
"OIS pricing gave back some of the risk of a BoC rate cut that was priced in last week in response to the weak employment data here, taking the probability of a 25bps ease in Q4 back to the 25% range (from 35% or so Friday) - that remains a significant change of gears on BoC thinking relative to the recent past though. Overall, the economy retains a soft bias and we look for the CAD stay better offered ahead of the BoC policy meeting next week as investors ponder the risk of a further shift in the policy bias."
"USDCAD lost ground yesterday but the market was essentially consolidating (inside range day) and looks to be forming a bull consolidation (triangle) on the short-term charts. Above 1.0910 early here will target another push higher. Key support intraday—though US retail sales—is 1.0850. We still prefer to look for USD buying opportunities. The broader bull trend is not complete and we continue to target 1.10+ as the near-term objective for this move."