FXStreet (Barcelona) – FX Strategists at TD Securities believe that a USD/CAD low might be near and any short-term dips remain a buy.
Key Quotes
“On the basis of our expectations—better than expected retail sales and higher than expected CPI data-this morning’s Canadian releases should provide the CAD with a modest lift. We don’t think a bounce will extend too far though and we rather think, in fact, that USDCAD may be close to an important short/medium-term low now. Short-term dips in USDCAD look a good buy, in our opinion from here.”
“Today’s data notwithstanding, our broader caution on Canadian growth momentum remains. Oil prices retain a soft bias and US-Canada spreads, while a little lower from the highs seen earlier in June, remain in very USD-supportive territory.”
“It has been out contention in the past few weeks that USDCAD’s correction from the late May/early June highs could extend to the 1.21/1.22, but likely little more, before the USD steadied and recovered.”
“With the Fed still walking the walk of a September lift-off and the BoC liable to remain sidelined for some time, we think the second half of the year retains a positive outlook for USDCAD. We note that spot today remains relatively “cheap” versus our assessment of fair value (1.2349).”
“Technically, price action is carving out a big rejection of sub-1.22 levels on the daily chart; the USD could not sustain levels below the key 40-day MA and the dip and sharp rebound in spot over the past 48-hours suggests that a rapid extension may unfold from here.”
“Intraday, look for gains to extend (possibly sharply) above 1.2250 for a return to the mid/upper 1.23s.“
“Look to get long; current price action and the underlying fundamental situation suggests the USD should be strong. The seasonal trends also start to turn much more supportive for the USD typically as we move through H2—the time looks ripe for a USDCAD bounce from this point of view too.”
(Market News Provided by FXstreet)