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USD/CAD down-leg near? – TDS

FXStreet (Barcelona) - FX Strategists at TD Securities maintain their bearish bias on USD/CAD, anticipating a lower move in over the next month.

Key Quotes

“USDCAD continues to trade in a tightly confined range this week. Perhaps a brief period of calm is a welcome development after last week’s big moves.”
“With no major drivers or events until next week’s FOMC and BoJ meetings, we expect USDCAD to remain confined to a 50-75 point range around the 1.22 figure.”

“Even yesterday’s bearish DOE inventory report which showed a much larger build than expected did little to unhinge USDCAD during intra-day trading. Afternoon trading has slowed to a crawl.”

“We reiterate our bias that we another down-leg over the next month or so. Price action should get more exciting in funds next week with the FOMC and BoJ meetings. The Fed will remain on hold but it will be interesting to see the tone of the communique given concern about a less robust rebound in Q2 growth and waffling conviction levels by key FOMC members over the outlook.”

“We view September as the earliest starting point for policy liftoff but note that risks are growing to be later. A soft tone in next week’s communique would serve as the next trigger point to pull funds lower from here.”

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