USD/CAD to range trade before resuming higher – TDS

FXStreet (Barcelona) - Shaun Osborne, Chief FX Strategist at TD Securities, views that USD/CAD is likely to range-trade before resuming higher, with support now lying at low/mid 1.23s.

Key Quotes

“Despite the swings in markets over the past few days, with think the strong USD (and weak commodity) story is still playing out. Sloppy data from Canada later this week (trade data tomorrow and jobs on Friday) should weigh on the CAD and contrast with relatively better US data.”

“For crude, inventory data may be a hurdle for the market today (API data last night showed large builds in petroleum products).”

“Weaker price action in WTI overnight suggest some cracks are appearing in the crude’s strong rally over the past few days. And we doubt OPEC producers who have indulged weak prices recently in a bid to regain market share from marginal producers will be happy to see “crude oil bull market” headlines flowing across the screens after the recent bounce in prices.”

“On the charts, we look for USDCAD support in the low/mid 1.23s, with USDCAD taking back about a third of the January rally so far in this dip. Intraday, gains back above 1.2440/50 should be bullish.”

“A period of rangey trade may lie ahead before the bull trend gets back on track technically.”