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11 May 2015
Buy USD/CAD dips – TDS
FXStreet (Barcelona) - FX Strategists at TD Securities, explain that USD/CAD might move down to test 1.2075/95 levels, but the sooner or later will make a run for 1.2450 levels.
Key Quotes
“The USD still looks a little better-supported against the CAD than at the start of the month, a factor that is primarily driven by more supportive spreads (US-Canada 5-year yield differentials widened modestly through the end of last week to reach +49bps); oil prices have slipped a fraction over the weekend but prices remain near $60; all told, our FV estimate for USDCAD today is close to spot (our model estimates an equilibrium of 1.2141), suggesting little pressure either way on funds at this point.”
“If there is key factor to watch near-term for USDCAD, it may be the broader tone of fixed income markets and any movement in US-Canada spreads.”
“On the charts, USDCAD nosed higher through Asian and European trade but is backing off of intraday resistance at 1.2140 as the first move in our session. The USD may drift back to the 1.2075/95 area from here but short-term trend momentum is positive and we still rather think the broader technical set-up favours USD gains and—sooner or later—a run up to test the double bottom (1.1945/50) trigger at 1.2199; a break above here targets 1.2450. Look to buy modest dips.”
Key Quotes
“The USD still looks a little better-supported against the CAD than at the start of the month, a factor that is primarily driven by more supportive spreads (US-Canada 5-year yield differentials widened modestly through the end of last week to reach +49bps); oil prices have slipped a fraction over the weekend but prices remain near $60; all told, our FV estimate for USDCAD today is close to spot (our model estimates an equilibrium of 1.2141), suggesting little pressure either way on funds at this point.”
“If there is key factor to watch near-term for USDCAD, it may be the broader tone of fixed income markets and any movement in US-Canada spreads.”
“On the charts, USDCAD nosed higher through Asian and European trade but is backing off of intraday resistance at 1.2140 as the first move in our session. The USD may drift back to the 1.2075/95 area from here but short-term trend momentum is positive and we still rather think the broader technical set-up favours USD gains and—sooner or later—a run up to test the double bottom (1.1945/50) trigger at 1.2199; a break above here targets 1.2450. Look to buy modest dips.”