13 May 2015
Soft US retail sales set to push USD/CAD below 1.1950 – TDS
FXStreet (Barcelona) - FX Strategists at TD Securities see downside potential for USD/CAD if the US retail sales data results in a soft figure, but dips are suggested to be used as a buy opportunity.
Key Quotes
“USDCAD is trading heavy again this morning dipping as low as 1.1967 but with US retail sales on the board today we are a bit concerned that a negative surprise (TD is looking for a softer read on sales vs. the market) may be a potent catalyst to test and break through the 1.1950 area, which has proven to be strong support. In the event that it does break through, initial downside potential looks to be in the low 1.19s but we think that it could break below the figure especially on a bullish DOE crude oil inventory report later this morning (WTI oil is already up by ~1% this morning).”
“We tend to think that with the verdict still out on the Federal Reserve over the timing of the first rate hike, a break to these levels still represents an attractive opportunity to get long USDCAD however; funds is trading well below than what is implied by our daily model estimate (~1.2130).”
“As we noted yesterday, we are less optimistic than the Bank of Canada for growth in the second half of the year. If there is any doubt that the US growth rebound is much less robust than anticipated, this will weigh on Canadian growth and sets us up nicely for a move higher in USDCAD in the second half of the year.”
Key Quotes
“USDCAD is trading heavy again this morning dipping as low as 1.1967 but with US retail sales on the board today we are a bit concerned that a negative surprise (TD is looking for a softer read on sales vs. the market) may be a potent catalyst to test and break through the 1.1950 area, which has proven to be strong support. In the event that it does break through, initial downside potential looks to be in the low 1.19s but we think that it could break below the figure especially on a bullish DOE crude oil inventory report later this morning (WTI oil is already up by ~1% this morning).”
“We tend to think that with the verdict still out on the Federal Reserve over the timing of the first rate hike, a break to these levels still represents an attractive opportunity to get long USDCAD however; funds is trading well below than what is implied by our daily model estimate (~1.2130).”
“As we noted yesterday, we are less optimistic than the Bank of Canada for growth in the second half of the year. If there is any doubt that the US growth rebound is much less robust than anticipated, this will weigh on Canadian growth and sets us up nicely for a move higher in USDCAD in the second half of the year.”