23 Jun 2014
USD/CAD gains to slow up - BMO Capital Markets
FXStreet (Guatemala) - Stephen Gallo, European Head of Currency Strategy at BMO Capital explained USD/CAD fell overnight as virtually the entire commodity bloc got a lift in Asian trade, except for the NOK.
Key Quotes:
The ADXY is currently up ever so slightly, and that has also provided some support to the CAD."
"The most important feature of USD/CAD currently is how much the recent move lower in spot has progressed beyond where the key drivers suggest the pair should trade. That discrepancy would probably be almost entirely due to the squeeze on CAD shorts last week."
"The divergence between spot and the key drivers will slow the CAD’s gains down from here, and what we alluded to last week should still hold: a stronger CAD means rates will be lower for longer. But the remaining medium-term CAD shorts will need an impetus to stay in that trade at this point, and that impetus will probably have to come from the BoC in some form or another. Barring that impetus, USD/CAD rallies into the 1.0750-1.0775 range probably need to be strategically faded for now."
Key Quotes:
The ADXY is currently up ever so slightly, and that has also provided some support to the CAD."
"The most important feature of USD/CAD currently is how much the recent move lower in spot has progressed beyond where the key drivers suggest the pair should trade. That discrepancy would probably be almost entirely due to the squeeze on CAD shorts last week."
"The divergence between spot and the key drivers will slow the CAD’s gains down from here, and what we alluded to last week should still hold: a stronger CAD means rates will be lower for longer. But the remaining medium-term CAD shorts will need an impetus to stay in that trade at this point, and that impetus will probably have to come from the BoC in some form or another. Barring that impetus, USD/CAD rallies into the 1.0750-1.0775 range probably need to be strategically faded for now."