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Poor start to the week for USD/CAD - TD Securities

FXStreet (Łódź) - TD Securities team of analysts observe that the USD/CAD drop from the upper 1.12 area on Monday continued following the release of FOMC minutes on Wednesday, sending the pair below this level.

Key quotes

"There is still a little more volatility in the market to come this week perhaps."

"Friday’s Canadian employment report is expected to show a decent rebound in jobs in September but the broader trend in jobs growth will stay fairly sluggish and our views expressed earlier in the week remain relevant here, we think—it’s the broader tone of the USD that is driving the USD/CAD bus at the moment, not domestic Canadian issues."

"Crude oil prices are a case in point; WTI remains under pressure after yesterday’s US oil inventory data showed a large build up on the week."

"Ordinarily, weaker crude prices might have had a bigger and more obvious, negative impact on the CAD than was been the case this week—though the CAD is under-performing broadly on the crosses today which may reflect some of the softness in energy prices. Persistently weak oil prices cannot be ignored in the longer run but in the short-term, it is the broader USD tone that will drive USD/CAD."

"Technically, USD/CAD price action looks very heavy for the week overall; a low close on the week will be a pretty big strike against the outlook for funds and suggest the risk of deeper losses."

"As it is, we think the market is liable to push lower to the 1.10 area (40-day MA), perhaps even the mid 1.09s to retest the 200-day MA."

"Intraday, The USD has found support in the upper 1.10 area so far but we are not convinced the rebound can extend much above 1.1120 for now. We would rather fade USD gains through the low/mid 1.11 area currently."

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