Back
11 Feb 2014
Flash: USD/CAD could weaken near-term - TD Securities
FXStreet (Guatemala) - Shaun Osbourne, Chief FX Strategist at TD Securities explained that USD/CAD is in a broader corrective phase after peaking above 1.12 late last month and that might mean a little more weakness to come in the near-term.
Key Quotes:
"The CAD was pushed lower in overnight trading in what looked like a belated reaction to comments from BoC Deputy Governor Murray who made the observation in comments reported late yesterday here that a weaker CAD would lead to broader economic growth in Canada. The comments attracted little attention on the release in our session as they added nothing to what we already know—Governor Poloz’s comments recently have clearly indicated an expectation that a weaker CAD will help the rotation away from domestic demand-led growth to exports. We rather think that any improvement here will be a while coming—net exports have been a drag on Canadian GDP since late 2008 and expectations are that they will remain a drag through 2015 at least."
"For today, CAD focus will be on Finance Minister Flaherty delivering his budget speech at 4.00PM ET; reports suggest that he will announce plans to help reduce youth unemployment and address consumer issues. Market will be most interested in the overall fiscal outline; the fall update projected a return to budget surpluses as of FY 2015 (CAD3.7bn, up from the original target of CAD800 mn announced in last March’s fiscal plan) after a string of annual deficits which peaked at 3.3%/GDP in 2010. The return to surplus has been well-telegraphed and should not have that much impact on the CAD in and of itself—Mr Flaherty even indicated last month that the surplus might be larger than expected."
"USD/CAD’s drift off the intraday highs may extend modestly near-term”.
“We still think USD/CAD is in a broader corrective phase after peaking above 1.12 late last month and that might mean a little more weakness to come in the near-term. We still think the medium-term trend is higher though and want to buy dips nearer 1.09."
Key Quotes:
"The CAD was pushed lower in overnight trading in what looked like a belated reaction to comments from BoC Deputy Governor Murray who made the observation in comments reported late yesterday here that a weaker CAD would lead to broader economic growth in Canada. The comments attracted little attention on the release in our session as they added nothing to what we already know—Governor Poloz’s comments recently have clearly indicated an expectation that a weaker CAD will help the rotation away from domestic demand-led growth to exports. We rather think that any improvement here will be a while coming—net exports have been a drag on Canadian GDP since late 2008 and expectations are that they will remain a drag through 2015 at least."
"For today, CAD focus will be on Finance Minister Flaherty delivering his budget speech at 4.00PM ET; reports suggest that he will announce plans to help reduce youth unemployment and address consumer issues. Market will be most interested in the overall fiscal outline; the fall update projected a return to budget surpluses as of FY 2015 (CAD3.7bn, up from the original target of CAD800 mn announced in last March’s fiscal plan) after a string of annual deficits which peaked at 3.3%/GDP in 2010. The return to surplus has been well-telegraphed and should not have that much impact on the CAD in and of itself—Mr Flaherty even indicated last month that the surplus might be larger than expected."
"USD/CAD’s drift off the intraday highs may extend modestly near-term”.
“We still think USD/CAD is in a broader corrective phase after peaking above 1.12 late last month and that might mean a little more weakness to come in the near-term. We still think the medium-term trend is higher though and want to buy dips nearer 1.09."