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28 Jul 2014
USD will continue to rally vs CAD? - BMO Capital Markets
FXStreet (Guatemala) - Stephen Gallo, European Head of Currency Strategy at BMO Capital explained that one of the main features of last week as a moderate move into long USD exposures, and USD/CAD’s strength was probably one result of that move.
Key Quotes:
“Although it is not fully reflected yet in positioning, the broad consensus that the ‘USD will eventually continue to rally’ probably has some FX investors jumping into ‘divergence plays’ early."
"Heading towards Wednesday & Thursday, above 1.0800 USD/CAD retains some ‘disappointment risk’ to either a: weak US GDP print, unexpectedly USD bearish ‘tweaks’ to the FOMC statement or a strong Canadian GDP reading. We would therefore expect 1.0825/30 to firmly cap the pair heading into mid-week, while 1.0775 should provide support. ‘Risk-off’ related to EU/Russian tensions, however, could see that area tested and broken before Wednesday though."
Key Quotes:
“Although it is not fully reflected yet in positioning, the broad consensus that the ‘USD will eventually continue to rally’ probably has some FX investors jumping into ‘divergence plays’ early."
"Heading towards Wednesday & Thursday, above 1.0800 USD/CAD retains some ‘disappointment risk’ to either a: weak US GDP print, unexpectedly USD bearish ‘tweaks’ to the FOMC statement or a strong Canadian GDP reading. We would therefore expect 1.0825/30 to firmly cap the pair heading into mid-week, while 1.0775 should provide support. ‘Risk-off’ related to EU/Russian tensions, however, could see that area tested and broken before Wednesday though."