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USD/CAD remains vulnerable – Westpac

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 17, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    Richard Franulovich, Strategist at Westpac, suggested the 1.35-1.36 area could cap occasional gains.

    Key Quotes

    “This could be it for USD/CAD’s downleg since midJan, neither CA-US 2yr bond spreads nor oil prices offering much confidence for sustained trade in USD/CAD sub-1.35”.

    “If anything 2yr bond spreads and oil prices both more fairly value USD/CAD nearer 1.38-1.40, substantially higher than current levels”.

    “A couple factors though suggest meaningful topside will be constrained and 1.35-1.36 may be a more appropriate target: 1) rates markets continue to overstate BoC easing risk (-8bp over the next 8mths); and 2) a potential pro-growth 22 March Federal Budget could trigger a reappraisal of GDP prospects”.
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