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USD undertone remains heavy on USD/CAD – TD Securities

FXStreet (Barcelona) - Analysts at TD Securities see USD/CAD leaking lower in sympathy with the generally softer USD.

Key Quotes

”The pattern of trade for funds since the start of the month and the turn lower from the upper 1.14 area has been geared towards a gentle slide which is taking the market back to the pivotal mid 1.12 area that has featured prominently in USDCAD trading over the past couple of months.”

“More losses may be seen near-term though we remain bullish on the longer-term outlook USDCAD."

“There are no domestic data releases today but BoC Deputy Governor Agathe Côté’s speech this afternoon is worth keeping an eye on as the deputy governors appear to be enjoying a greater freedom of expression under Governor Poloz than we have been used to.”

“While CAD correlations with crude oil, gold, and the CRB index generally continue to tighten, the CAD’s correlation with nat gas remains low (overall the past year, the correlation between CAD and nat gas futures has remained within a +/-15% band over a rolling three-month window study)"

“Our estimate suggests spot FV is 1.1420 this morning, with the actual level nearly 1 standard deviation below the estimate. Barring any sharp p rebound in crude or drop in US yields, we expect USD downside potential to remain limited to technical support in the low/mid 1.12s.”

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