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USD/CAD sidelined in current ranges - TD Securities

FXStreet (Barcelona) - Shaun Osbourne, Chief FX Strategist at TD Securities feels the USD/CAD will be side-lined for the time being and caught in existing narrow range.

Key Quotes:

"The CAD is something of a sideshow for the markets still as funds continues to carve out a well-defined trading range between firm support around 1.12 and corporate and other interest to sell nearer 1.13. Given the focus on developments outside of Canada this week and a distinct lack of market-moving domestic data ahead of Friday’s industry-level GDP for August, the CAD is likely to remain something of an afterthought for the markets. About the most exciting thing for Canada in the early part of the week may be the Toronto mayoral election (today)."

"We remain cautious on the near-term potential for the USD build on its recent gains through the end of the tear; positioning remains extensively long USD among speculative investors (even if Friday’s data showed a marginal decline in the record aggregate long USD position seen in the October 14th week’s data, the USD42.2bn total remains very large by historic standards) and there is a seasonal tendency for the USD to slip broadly in the last couple of months of the year."

"But there are some clear impediments to the CAD recovering much ground at the moment; commodity prices remain under pressure and it is notable that WTI continues to pressure the $80/bbl area. And the Bank of Canada seems happy to sit on the sidelines for now and reflect on the challenges facing the domestic economy as the Fed moves towards policy normalization."

"It’s a range trade for funds now but we still think USD/CAD is likely to reach 1.15 in H1 next year and minor, corrective dips in funds in the next few weeks will be a buying opportunity."

"On the charts, the last three or four days have shown little real directional intent but the early bias looks a little more constructive on the short-term charts and weak oil prices hovering near the mid-October low may encourage a push through 1.1235/40 in early trading to signal a push back up towards 1.13."

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