USDCAD: Buy on dips to be the suggested trade as BoC provides a floor – TDS

By FXStreet FXStreet (Delhi) – Research Team at TDS, suggest that USDCAD has found renewed bid tone following the Bank of Canada decision, where the overnight rate was left unchanged.

Key Quotes

“As we expected, the Bank upgraded Q3 growth but downgraded the Q4 and 2016 outlook reflecting greater international risks. While the Governor sounded a tad more constructive in the press conference USDCAD stalled around 1.3120/50 zone after a big figure leap higher prior to the statement.”

“Overall, even though the Bank looks content in remaining on the sidelines (for now), it does not imply that the USDCAD bull market is over. As we have noted in this section before, we anticipate that USDCAD is in for a period of range trading.”

“We view 1.2800 as the lower bound but we target 1.33 by the end of the year. We are more confident in a buy-the-dip mentality. Technically, the break of key resistance at 1.3080 now serves as an attractive level to add to USDCAD longs.”

“Our daily fair value estimate sits at 1.2915 and has been edging higher over the past few trading sessions. We noted yesterday that the rolling correlation of daily returns between spreads and spot has weakened making FV less of …read more

Source:: FX Street