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CAD marching on across the crosses - TDS

FXStreet (Guatemala) - Analysts at TD Securities looked into CAD from other angles, noting the rally across some of the crosses.

Key Quotes:

“While CAD strength versus the EUR and JPY is arguably underpinned by this morning’s data putting marginally more distance between where the ECB and BoJ are on the policy spectrum relative to the BoC, we see little justification in a sustained push lower in USD/CAD at the moment”.

“Short-term Canadian rates are not reacting to the CPI data and US-Canada spreads in the belly of the curve are unchanged on the day—around a 10bps premium for US yields”.

“With WTI prices backtracking 2% from the earlier spike to near USD78/bbl, our USD/CAD FV regression model based on terms of trade and 5-year spreads suggest USD/CAD fair value is 1.1380, with spot nearly 1 standard deviation below this point right now”.

“In our 2015 Outlook released yesterday, we suggested buying USD/CAD at 1.12 for a medium term trade (risking 1.09); we target spot rising to 1.19 later in 2015. One data point does not
change that view”.

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