9 Jun 2015
USD/CAD focus shifts to 1.2298 – Scotiabank
FXStreet (Barcelona) - Eric Theoret, CFA, CMT, Currency Strategist at Scotiabank, notes that the near-term focus for USD/CAD has shifted to the downside.
Key Quotes
“USDCAD is weak, falling to a 10-session low and breaking out of its post-BoC range from late May. The combination of stronger employment and housing data are reinforcing the BoC’s outlook, with a focus on economic recovery as we progress beyond the recent oil price shock. OIS suggest relatively neutral BoC expectations, and CAD is trading in line with the U.S.-Canada 2Y yield spread.”
“The absence of domestic releases will leave near-term CAD risk centered on the U.S. JOLTS data as well as the broader market tone. Options prices are suggestive of near term USDCAD weakness as we note a recent shift in risk reversals toward reduced demand for upside USDCAD protection (middle chart), hinting to a modest improvement in sentiment.”
“USDCAD short-term technicals: bullish-neutral—signals are softening to neutral and USDCAD is falling further below its 9 day MA (1.2446). Focus turns to the 21 day MA at 1.2298. We note that recent gains have been limited above 1.2500.”
Key Quotes
“USDCAD is weak, falling to a 10-session low and breaking out of its post-BoC range from late May. The combination of stronger employment and housing data are reinforcing the BoC’s outlook, with a focus on economic recovery as we progress beyond the recent oil price shock. OIS suggest relatively neutral BoC expectations, and CAD is trading in line with the U.S.-Canada 2Y yield spread.”
“The absence of domestic releases will leave near-term CAD risk centered on the U.S. JOLTS data as well as the broader market tone. Options prices are suggestive of near term USDCAD weakness as we note a recent shift in risk reversals toward reduced demand for upside USDCAD protection (middle chart), hinting to a modest improvement in sentiment.”
“USDCAD short-term technicals: bullish-neutral—signals are softening to neutral and USDCAD is falling further below its 9 day MA (1.2446). Focus turns to the 21 day MA at 1.2298. We note that recent gains have been limited above 1.2500.”