USD/CAD: Looks Cheap Here; High-Frequency Model Targets A Push Back To 1.34 – TD

Jun 28, 2017 at 3:00 AM EDT

The Canadian dollar enjoyed the weakness of the dollar and more importantly, the rise in oil prices. What’s next? Has it gone too far?

The Canadian dollar enjoyed the weakness of the dollar and more importantly, the rise in oil prices. What’s next? Has it gone too far? Stephen Poloz will be speaking later today.

Here is their view, courtesy of eFXnews:

TD Research argues that near-term dynamics point to USD/CAD is likely to remain to hover around the predictable 1.32-1.36 range with a bias to trade near the lower end in Q3.

“This reflects the fact that even though the BoC surprised markets with its shift in language around the removal of insurance cuts, it now priced to run parallel to the Fed over the next two years. Interest rate levels also remain a headwind, especially as $ betas to rates are still elevated and we expect a squeeze in G10FX,’ TD adds.

TD also notes USD/CAD also looks cheap with its High-Frequency-Fair Value Model (HFFV) arguing for a push back to 1.34.

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