Home CAD: What’s The Signal From ‘Home Capital Group’ Sage? –
Daily Look

CAD: What’s The Signal From ‘Home Capital Group’ Sage? –

The Canadian dollar managed to stabilize from the fall in oil prices, as these have stabilized.  But the problems of the loonie don’t end with the black gold. The C$ also suffers from issues in Canadian housing, now focused  on Ontario. What does it mean going forward?

Here is their view, courtesy of eFXnews:

Barclays Capital FX Strategy Research notes that  concern about the Canadian housing market returned after Home Capital Group suffered heavy deposit withdrawals,  requiring a CAD2bn credit line, stemming from an Ontario Securities Commission investigation into its failure to disclose malpractice in its mortgage brokerage network.

In that regard, Barclays argues that despite high levels of debt and quickly increasing prices, there are no signs of stress in the Canadian housing sector.

“We do not see a significant market-wide signal from the Home Capital saga, as it accounts for 1% of the residential mortgage market, and the issues do not appear to indicate a more broad subprime failure, but do suggest regulatory overview is healthy in Canada,” Barclays adds.

As such,  Barclays argues that although the situation is likely company-specific, it is a reminder of the financial stability challenges at hand, and is likely to keep sentiment in CAD subdued over the near term.

In line with this view,  Barclays maintains its view for a modest depreciation for CAD over the coming months targeting USD/CAD at 1.38 by end of September, and at 1.40 by the end of the year.

USD/CAD is trading circa 1.37 as of writing.

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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.