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The Canadian dollar has pulled its US counterpart to 2, ½ month lows at 1.3710, the FX Analysts’ team at TD Securities, however, are sceptical about further CAD appreciation.


Key quotes

“If anything, we expect him (BoC Governor Macklem) to defer to the terms of trade as the primary driver of the CAD. On this basis, the terms of trade are rather poor given the deterioration in oil prices.”

“Moreover, trade and household liquidity issues are likely to surface as considerable drags for the CAD. Indeed, we expect US/China pressures to escalate and ‘smaller open’ economies like Canada may serve as a proxy battleground, as is the case with Australia already.”

“We are inclined to fade moves towards 1.37 while 1.3850 will now be notable resistance. A break above the latter will likely have us strongly consider a more significant topside move.”