Home CAD: Vulnerable To A Mix Of 3 Risks: Key Levels
Daily Look

CAD: Vulnerable To A Mix Of 3 Risks: Key Levels

The Canadian dollar is looking for a new direction, with many moving parts. The team at TD lays down the 3 risks:

Here is their view, courtesy of eFXnews:

The recent bump in USDCAD is consistent with the lift in shortterm rate differentials.

The 2y US-CA spread sits around 43bp. Historically, this level has been consistent with USDCAD at 1.36 leaving it at a steep discount to one of its key cyclical drivers. The broader improvement in risk appetite has probably insulated CAD to some degree. However, we also think the market is pricing a small Trump premium on the greenback. Even so, positioning data shows a large buildup in CAD long exposure. IMM data has seen net long CAD exposure over the past six weeks, and long exposure is approaching the highest level since mid-2016. Our sentiment indices show CAD with the largest buildup in long exposure over the past 3 months.

We think this leaves CAD vulnerable to a mix of 1) SOTU 2) stronger US data and 3) BoC risks.  The upside break of the 1.3130 level opens up a test of 1.3250.

For lots  more FX trades from major banks, sign up to eFXplus

By signing up to eFXplus via the link above, you are directly supporting  Forex Crunch.

 

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.