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10 Feb 2014
Flash: USD/CAD waiting for catalysts - BMO
FXStreet (Barcelona) - Stephen Gallo, European Head of Currency Strategy at BMO Capital, expects stronger drivers to help determine a more defined trend in the USD/CAD.
Key Quotes
"A bit tense, but not overly so. This is how we’d describe the mood during the London morning as the new week started. Asian shares ended mostly higher, following Wall Street’s Friday gains, but European markets generally traded mixed-to-soggy during the London morning.This tone was reflected in a rather soft start for USDJPY, and the limited appetite of players to put risk on across major G10 pairs."
"The continuation of the Fed taper has resulted in lower US yields for now. That is supportive for risk. However, the Fed currently appears to be pushing ahead with the taper into somewhat softer US conditions and a rout in EM. Those are reasons to stay cautious."
"USDCAD still feels like it’s waiting for a directional ‘signal’. Hence, we remain cautious about putting anything aggressive on for the time being. Although a lot of medium-term players who sold CAD between 1.070 and 1.100 are still substantially short, the market is ‘better balanced’ than it was when we first took out 1.120."
"This, as well as firm commodity prices, are reasons why there is little immediate threat of a sharp USDCAD move in either direction right now. Softer US yields and the ‘debt ceiling debacle’ should also limit USD strength for the time being."
Key Quotes
"A bit tense, but not overly so. This is how we’d describe the mood during the London morning as the new week started. Asian shares ended mostly higher, following Wall Street’s Friday gains, but European markets generally traded mixed-to-soggy during the London morning.This tone was reflected in a rather soft start for USDJPY, and the limited appetite of players to put risk on across major G10 pairs."
"The continuation of the Fed taper has resulted in lower US yields for now. That is supportive for risk. However, the Fed currently appears to be pushing ahead with the taper into somewhat softer US conditions and a rout in EM. Those are reasons to stay cautious."
"USDCAD still feels like it’s waiting for a directional ‘signal’. Hence, we remain cautious about putting anything aggressive on for the time being. Although a lot of medium-term players who sold CAD between 1.070 and 1.100 are still substantially short, the market is ‘better balanced’ than it was when we first took out 1.120."
"This, as well as firm commodity prices, are reasons why there is little immediate threat of a sharp USDCAD move in either direction right now. Softer US yields and the ‘debt ceiling debacle’ should also limit USD strength for the time being."