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20 Apr 2015
USD/CAD stable for now, but too soon for a dip-buy strategy – TDS
FXStreet (Barcelona) - FX Strategists at TD Securities, remain longer-term bullish on USD/CAD, expecting consolidation at current stage, and further suggest adopting a buy-on-dips strategy for the pair only closer to the second half of the year.
Key Quotes
“USDCAD’s wild week finished as crazy as it started post-BoC meeting. After trading as low as 1.2088 on an intra-day basis post-strong retail sales and inflation on Friday, funds managed to settle around the 1.2250 level by end of day.”
“Such an intra-day shift may suggest that investors are finding a new trough around 1.22, which is essentially spot on our fair value estimate at the moment, or awaiting the next major catalyst to provide direction on funds.”
“As North America walks in, funds is still holding around this level. But, the question here is whether the sell-off has more to run or does this present a golden opportunity to buy the dip? We think it is too soon to do the latter as we may have more consolidation ahead for the USD especially with a lack of macro drivers this week to provide further direction (though we would be wary of US durable goods report on Friday where we see the risk of an upside surprise versus the market).”
“But with the Bank of Canada in a wait-and-see mode possibly for the next meeting or two so, the prospect of a sustainable bounce higher in funds looks limited for now.”
Key Quotes
“USDCAD’s wild week finished as crazy as it started post-BoC meeting. After trading as low as 1.2088 on an intra-day basis post-strong retail sales and inflation on Friday, funds managed to settle around the 1.2250 level by end of day.”
“Such an intra-day shift may suggest that investors are finding a new trough around 1.22, which is essentially spot on our fair value estimate at the moment, or awaiting the next major catalyst to provide direction on funds.”
“As North America walks in, funds is still holding around this level. But, the question here is whether the sell-off has more to run or does this present a golden opportunity to buy the dip? We think it is too soon to do the latter as we may have more consolidation ahead for the USD especially with a lack of macro drivers this week to provide further direction (though we would be wary of US durable goods report on Friday where we see the risk of an upside surprise versus the market).”
“But with the Bank of Canada in a wait-and-see mode possibly for the next meeting or two so, the prospect of a sustainable bounce higher in funds looks limited for now.”