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9 Apr 2015
USD/CAD sees downside potential near high 1.24 region – TDS
FXStreet (Barcelona) - FX Strategists at TD Securities view that USD/CAD might make a move lower towards high 1.24 area, and expecting to attract buyers near this ahead of tomorrow’s Canadian jobs data release.
Key Quotes
“Crude oil is trading higher in the overnight session providing support for CAD. After yesterday's wild session which saw funds reject the 1.24 level (again) and subsequently surge to 1.25+, USDCAD is trading heavy again in the last hour having stalled against the 40-day moving average at 1.2562 overnight.”
“We see downside potential in the high 1.24 area near-term; in fact our fair value estimate suggests funds should be trading at 1.2460 at the moment, all else being equal. A push to near or below this area would likely see dip buyers re-enter especially ahead of tomorrow's Canadian jobs number, however.”
“While notoriously volatile we expect jobs to be weak at -10k (market: flat) and should leave traders positioned for such into tomorrow.”
“WTI continues to face some daunting supply/demand dynamics and there is little expectation that the building inventory problem will alter any time soon; DoE data show US crude inventories have risen by around 100 mn barrels since the start of the year and even with yesterday’s massive inventory rise, WTI remains above $50/bbl (and trades a little firmer on the day).”
“Meanwhile the recent trend in US-Canada spread compression continues and while crude holds up and yield differentials narrow, we do not expect the CAD to weaken significantly against the USD.”
Key Quotes
“Crude oil is trading higher in the overnight session providing support for CAD. After yesterday's wild session which saw funds reject the 1.24 level (again) and subsequently surge to 1.25+, USDCAD is trading heavy again in the last hour having stalled against the 40-day moving average at 1.2562 overnight.”
“We see downside potential in the high 1.24 area near-term; in fact our fair value estimate suggests funds should be trading at 1.2460 at the moment, all else being equal. A push to near or below this area would likely see dip buyers re-enter especially ahead of tomorrow's Canadian jobs number, however.”
“While notoriously volatile we expect jobs to be weak at -10k (market: flat) and should leave traders positioned for such into tomorrow.”
“WTI continues to face some daunting supply/demand dynamics and there is little expectation that the building inventory problem will alter any time soon; DoE data show US crude inventories have risen by around 100 mn barrels since the start of the year and even with yesterday’s massive inventory rise, WTI remains above $50/bbl (and trades a little firmer on the day).”
“Meanwhile the recent trend in US-Canada spread compression continues and while crude holds up and yield differentials narrow, we do not expect the CAD to weaken significantly against the USD.”