USDCAD: Strategic downside pressures building up – TDS

By FXStreet FXStreet (Delhi) – Ned Rumpeltin, European Head of Currency Strategy at TD Securities, suggests that the main event risk for USDCAD today will be retail sales and our above-consensus expectation and below consensus expectation for headline and core sales respectively will likely leave USDCAD stuck in the recent range but on the margin point to some downside.

Key Quotes

“We think there may be some asymmetry for funds around retail sales as the market may be more sensitive to a negative surprise in the data.”

“We continue to see a valuation gap with our fair value estimate and USDCAD, which suggests spot should be trading closer to 1.2830. That said, we think the washout to the 1.30 area last Friday may have cleaned out a decent amount of long USDCAD positions, which makes betting on such a compression less appealing at the moment. This is because we think that the market is in an extended lull phase post Fed and the market is reluctant to deploy too much risk at the moment with frustrations running high with the mixed messaging from the Fed.”

“That said, the technical picture is a bit more cautious as we have traded back below trendline support that comes in …read more

Source:: FX Street