21 Jul 2015
USD/CAD: Downside exposed to 1.2780/05 - TDS
FXStreet (Guatemala) - Analysts at TD Securities explained, for the near term, they think a test of support at 1.2805/1.2780 is likely in USD/CAD.
Key Quotes:
"A deeper correction to probe the 1.2560 region is certainly within the realm of possibility as this approximates the 50% retracement level for the 18 June – 20 July up-move."
"Once this period of consolidation is behind us, we continue to believe that the natural centre of gravity for USD/CAD is higher. Indeed, our expectation for 1.33 at year end is quite achievable, in our view, against the backdrop of a stronger US economy and tighter Fed policy.
"This view is highly dependent on the Fed holding up its end of the bargain, however. We think the Canadian economy is likely to begin showing signs of improvement by the third quarter, albeit at a sub-trend rate of growth. This should help rein in market expectations for further BoC cuts at the margin and limit the local economy’s drag on the CAD. If the Fed’s expected monetary policy divergence does not materialise – or does so in a more limited fashion than we currently expect – then the USD’s capacity for further gains will be limited."
Key Quotes:
"A deeper correction to probe the 1.2560 region is certainly within the realm of possibility as this approximates the 50% retracement level for the 18 June – 20 July up-move."
"Once this period of consolidation is behind us, we continue to believe that the natural centre of gravity for USD/CAD is higher. Indeed, our expectation for 1.33 at year end is quite achievable, in our view, against the backdrop of a stronger US economy and tighter Fed policy.
"This view is highly dependent on the Fed holding up its end of the bargain, however. We think the Canadian economy is likely to begin showing signs of improvement by the third quarter, albeit at a sub-trend rate of growth. This should help rein in market expectations for further BoC cuts at the margin and limit the local economy’s drag on the CAD. If the Fed’s expected monetary policy divergence does not materialise – or does so in a more limited fashion than we currently expect – then the USD’s capacity for further gains will be limited."