26 May 2014
Looking into CAD ahead of key US data - TD Securities
FXStreet (Guatemala) - Shaun Osbourne, Chief FX Strategist at TD Securities explained the key events around the CAD while otherwise it looks to be quite range trading.
Key Quotes:
"USD/CAD closed the week out on a soft note last week, reflecting the modest bounce the CAD found on the back of Friday’s CPI data. Headline inflation moved back to the BoC’s target, much as we expected, however core inflation remains subdued and, as policy makers have stressed that they will “look through” transitory, energy-driven gains in prices, we see no reason to believe the data means any sort of shift in the BoC’s bias at present."
"For today, we look for quiet range trading and, absent any motivation to do otherwise, the CAD is likely to respect Newton’s law of motion and continue to edge in the direction of trade we saw through the close of business Friday, modestly higher overall in other words. That may be a little more apparent on some of the crosses, especially EUR/CAD, for example, where there is strong and building downside momentum after the cross broke below some key support points last week. Here, we think the push below the 1.49 area will help extend the recent weakness towards our bear target of 1.4450 in the months ahead."
"Over the balance of the week, the US data calendar fills up very quickly again with some key data tomorrow, durable goods and house prices but the Canadian calendar remains thinly-populated until later in the week when we get current account data Thursday and Q1 GDP Friday. We think Canada can avoid a lot of the weather effects that slowed US GDP sharply at the start of the year and look for 1.9% GDP growth for Q1 (down from 2.9% in Q4 but above market expectations of a 1.7% gain). We look for industry-level GDP to rise 0.1% in the March month."
"If the prevailing trend continues, we can expect USD/CAD to pressure support around 1.0650 (last week’s low) intraday—though perhaps not that much more. We look for resistance in the 1.0675/80 zone."
Key Quotes:
"USD/CAD closed the week out on a soft note last week, reflecting the modest bounce the CAD found on the back of Friday’s CPI data. Headline inflation moved back to the BoC’s target, much as we expected, however core inflation remains subdued and, as policy makers have stressed that they will “look through” transitory, energy-driven gains in prices, we see no reason to believe the data means any sort of shift in the BoC’s bias at present."
"For today, we look for quiet range trading and, absent any motivation to do otherwise, the CAD is likely to respect Newton’s law of motion and continue to edge in the direction of trade we saw through the close of business Friday, modestly higher overall in other words. That may be a little more apparent on some of the crosses, especially EUR/CAD, for example, where there is strong and building downside momentum after the cross broke below some key support points last week. Here, we think the push below the 1.49 area will help extend the recent weakness towards our bear target of 1.4450 in the months ahead."
"Over the balance of the week, the US data calendar fills up very quickly again with some key data tomorrow, durable goods and house prices but the Canadian calendar remains thinly-populated until later in the week when we get current account data Thursday and Q1 GDP Friday. We think Canada can avoid a lot of the weather effects that slowed US GDP sharply at the start of the year and look for 1.9% GDP growth for Q1 (down from 2.9% in Q4 but above market expectations of a 1.7% gain). We look for industry-level GDP to rise 0.1% in the March month."
"If the prevailing trend continues, we can expect USD/CAD to pressure support around 1.0650 (last week’s low) intraday—though perhaps not that much more. We look for resistance in the 1.0675/80 zone."