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USD/CAD bullish target at 1.28 – TDS


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FXStreet (Barcelona) – FX Strategists at TD Securities maintain their bullish view on USD/CAD, maintaining an upside target at 1.28 levels.

Key Quotes


“Friday’s data fiesta unhinged USDCAD from the 1.22 figure and has tested the 1.23 level (the current fair value estimate is around 1.2210). Though retail sales was moderately better than expected, the combination of a downside surprise on Canadian CPI and upside to the US inflation figures unleashed a vicious 1-big figure move in the trading session. The realization of the downside surprise in Canada plays into the “above-target inflation is only temporary” theme that Governor Poloz has presented. And, in Poloz’s speech last week he noted that true underlying inflation was around 1.6-1.8%. Our own estimate suggests that it is above 2.0%.”


“With the US and UK out for holidays, we do not much expect price action today. Importantly, Friday’s data development finally pulled funds off of the 1.22 level and in the direction that where we think it should be moving.”


“We are long USDCAD with 1.28 as our target as we think the Bank is overestimating growth in the second half of the year.”