Back
23 Jan 2015
Weak data to weigh on CAD – TDS
FXStreet (Barcelona) - Shaun Osborne, Chief FX Strategist at TD Securities, anticipates USD/CAD might head towards 1.30 levels in the next few months, and further adds that a probable weak Canadian data would weigh on CAD, expecting retails sales and inflation data to come out soft and below expectations.
Key Quotes
“USDCAD was an island of stability yesterday for a change as all the action went on around it; it was not a complete surprise that the drop in EURCAD (down five big figures since yesterday’s open) managed to temper the rise in USDCAD.“
“The trend in funds remains higher, though and we continue to advocate buying on modest USD dips; soft oil and more accommodative BoC policy will keep USDCAD well-supported.”
“Moreover, this morning’s Canadian data releases will likely weigh on the CAD as we expect both headline retail sales and inflation data to miss consensus expectations on the downside.”
“To some extent, the BoC’s rate shocker earlier in the week will temper the CAD’s reaction to very soft data but weakness will also highlight expectations that the BoC has more work to do to support the economy.“
“PM Harper helpfully chimed in yesterday with the observation that domestic monetary policy was “still relatively restrictive”. It might be just an observation, however unusual, but it certainly suggests that the BoC may be under a little more pressure to give the economy a further boost.“
“We remain conviction USDCAD bulls; our revised FX forecasts due out shortly will reinforce the view expressed earlier this week that USDCAD is heading to 1.30 at least in the next few months. We think USDCAD dips remain a buy but—as with EURUSD—the risk of a more substantial correction cannot be ignored in the next few weeks given the scale of USDCAD gains in the past three months.”
Key Quotes
“USDCAD was an island of stability yesterday for a change as all the action went on around it; it was not a complete surprise that the drop in EURCAD (down five big figures since yesterday’s open) managed to temper the rise in USDCAD.“
“The trend in funds remains higher, though and we continue to advocate buying on modest USD dips; soft oil and more accommodative BoC policy will keep USDCAD well-supported.”
“Moreover, this morning’s Canadian data releases will likely weigh on the CAD as we expect both headline retail sales and inflation data to miss consensus expectations on the downside.”
“To some extent, the BoC’s rate shocker earlier in the week will temper the CAD’s reaction to very soft data but weakness will also highlight expectations that the BoC has more work to do to support the economy.“
“PM Harper helpfully chimed in yesterday with the observation that domestic monetary policy was “still relatively restrictive”. It might be just an observation, however unusual, but it certainly suggests that the BoC may be under a little more pressure to give the economy a further boost.“
“We remain conviction USDCAD bulls; our revised FX forecasts due out shortly will reinforce the view expressed earlier this week that USDCAD is heading to 1.30 at least in the next few months. We think USDCAD dips remain a buy but—as with EURUSD—the risk of a more substantial correction cannot be ignored in the next few weeks given the scale of USDCAD gains in the past three months.”