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22 Apr 2015
Better opportunities to trade CAD on the crosses – TDS
FXStreet (Barcelona) - FX Strategists at TD Securities, note that the USD/CAD will likely remain trapped in a range today until a suitable catalyst emerges, and at present short EUR/CAD and long CAD/JPY looks a better trade.
Key Quotes
“With the calendar devoid of major economic data, we think USDCAD is prone to trade in a 50-75pip range until a clear macro catalyst emerges (we look towards dual North American employment in a couple weeks).”
“This morning’s DOE inventory report may inject some short-term volatility; the market is expecting a very small build but given the heavy tone of USDCAD this morning we would expect to see greater downside potential on a bullish inventory report.”
“We continue to like fading rallies in USDCAD and barring a major market moving headline, we expect funds to eventually settle around our daily fair value estimate of 1.22.”
“We think there are better opportunities to trade CAD on the crosses. Our much favoured short EURCAD theme looks to have stalled for now though from a medium-term perspective we think it has further to run.”
“Nonetheless, we would shift focus to CADJPY which has found strong support above its 100 and 200-day MAs following last week’s relatively upbeat tone from the Bank of Canada. Japan will require constant reflation efforts to support its economy and meet the inflation target. Comments from various political officials and BoJ members in recent days suggest that another round of stimulus is likely, though the timing seems uncertain.”
“Nonetheless, we think going in small long CADJPY positions heading into next week’s BoJ meeting makes sense to hedge against the small chance and not widely held view of further easing.”
Key Quotes
“With the calendar devoid of major economic data, we think USDCAD is prone to trade in a 50-75pip range until a clear macro catalyst emerges (we look towards dual North American employment in a couple weeks).”
“This morning’s DOE inventory report may inject some short-term volatility; the market is expecting a very small build but given the heavy tone of USDCAD this morning we would expect to see greater downside potential on a bullish inventory report.”
“We continue to like fading rallies in USDCAD and barring a major market moving headline, we expect funds to eventually settle around our daily fair value estimate of 1.22.”
“We think there are better opportunities to trade CAD on the crosses. Our much favoured short EURCAD theme looks to have stalled for now though from a medium-term perspective we think it has further to run.”
“Nonetheless, we would shift focus to CADJPY which has found strong support above its 100 and 200-day MAs following last week’s relatively upbeat tone from the Bank of Canada. Japan will require constant reflation efforts to support its economy and meet the inflation target. Comments from various political officials and BoJ members in recent days suggest that another round of stimulus is likely, though the timing seems uncertain.”
“Nonetheless, we think going in small long CADJPY positions heading into next week’s BoJ meeting makes sense to hedge against the small chance and not widely held view of further easing.”