23 Apr 2014
USD/CAD to test 1.1065/50% retrace’? - TD Securities
FXStreet (Guatemala) - Shaun Osbourne, Chief FX Strategist at TD Securities explained that having pierced through the 1.1019 retracement resistance yesterday suggests USD/CAD could test 1.1065/70 (50% retracement resistance) in the near term.
Key Quotes
"CAD has lost a bit more ground against the greenback overnight following yesterday’s close at 1.1028. Today we may see further weakness in funds upon the release of February Retail Sales, which we are expecting will contract by 0.2% on the month, whereas market consensus calls for a 0.5% monthly gain."
" If our below-consensus retail sales call materializes, stronger than expected US data later today (Markit’s PMI at 9.45ET and New Home sales at 10.00ET) may do the trick and drive the pair higher to those levels."
"The next relevant event for CAD will be tomorrow’s speech by BoC Governor Poloz, to be delivered at the Saskatchewan Trade & Export Partnership at 14.45ET. Markets will be trading of the headlines from his remarks to be released in advance, though."
"The governor will also hold a press conference afterwards at 16.00ET. Given the venue and the audience in attendance, we anticipate remarks about Canadian competitiveness, rotation of growth drivers, and, of course, questions from the audience about CAD."
"On the latter, Mr. Poloz will likely stick to the arguments he offered at the FAD press conference last week; namely, that the CAD depreciation of recent months will likely have a transitory boosting effect on Canadian inflation, that the BoC does not have a preferred level for USD/CAD, and that a weaker currency has conflicting effects on businesses profitable given that it boosts external competitiveness but also raises the cost of imported inputs. In any case, the market will pay close attention to Mr. Poloz’ wording to get a sense of direction."
Shaun Osbourne, Chief FX Strategist at TD Securities explained that having pierced through the 1.1019 retracement resistance yesterday suggests USD/CAD could test 1.1065/70 (50% retracement resistance) in the near term.
Key Quotes
"CAD has lost a bit more ground against the greenback overnight following yesterday’s close at 1.1028. Today we may see further weakness in funds upon the release of February Retail Sales, which we are expecting will contract by 0.2% on the month, whereas market consensus calls for a 0.5% monthly gain."
" If our below-consensus retail sales call materializes, stronger than expected US data later today (Markit’s PMI at 9.45ET and New Home sales at 10.00ET) may do the trick and drive the pair higher to those levels."
"The next relevant event for CAD will be tomorrow’s speech by BoC Governor Poloz, to be delivered at the Saskatchewan Trade & Export Partnership at 14.45ET. Markets will be trading of the headlines from his remarks to be released in advance, though."
"The governor will also hold a press conference afterwards at 16.00ET. Given the venue and the audience in attendance, we anticipate remarks about Canadian competitiveness, rotation of growth drivers, and, of course, questions from the audience about CAD."
"On the latter, Mr. Poloz will likely stick to the arguments he offered at the FAD press conference last week; namely, that the CAD depreciation of recent months will likely have a transitory boosting effect on Canadian inflation, that the BoC does not have a preferred level for USD/CAD, and that a weaker currency has conflicting effects on businesses profitable given that it boosts external competitiveness but also raises the cost of imported inputs. In any case, the market will pay close attention to Mr. Poloz’ wording to get a sense of direction."
Shaun Osbourne, Chief FX Strategist at TD Securities explained that having pierced through the 1.1019 retracement resistance yesterday suggests USD/CAD could test 1.1065/70 (50% retracement resistance) in the near term.