FXStreet (Delhi) – Research Team at TDS, suggest that at the moment, USDCAD is in a state of inertia and this Wednesday's trade balance report (expected to reveal a modest narrowing in the deficit), will be important but unlikely to materially alter the needle on funds. Key Quotes “While the evolution of non-energy trade remains crucial to the Bank of Canada's forecast, the Bank revealed a level of comfort with the current policy backdrop which the Governor noted that only about half of the interest rate relief provided this year has been observed. As such, this will put a great deal of dependency on US data for direction on USDCAD as the Fed's liftoff date is "data dependent".” “At this time, we remain comfortable with our longstanding year-end forecast of 1.33 but the Fed's meeting last week suggests that there is some upside risk to this view. So, we like strategic accumulation of USDCAD longs into the New Year and we have viewed 1.3050/80 as an attractive accumulation point. But, in light of the data that lies ahead and where spot currently trades, disappointing data this week would leave us more comfortable in adding to longs towards the 1.3000 figure. Fair value opens today in line with spot at 1.3110.” “We think there are modestly attractive opportunities on CAD crosses. We have frequently noted short EURCAD is biased to the downside and we see 4-5 big figures of gains ahead until the end of the year (to respect additional ECB QE, and the risk of a Fed hike).” “Elsewhere we are warming up again to GBPCAD, which we became neutral on through the summer but BoE hikes are priced too far out the curve. GBP is not a defensive currency but we think this currency is under owned (IMM positioning suggests this is the case as well) and at times gets forgotten as market focus has been squarely on ECB risks and the Fed's 180 on communication (perhaps rightly so).” “Even if our March hike for the Fed is realized, we expect the BOE to shortly follow in May. If the Fed hikes in December (a risk but not our base case) this will likely put pressure on the sterling front end to price in the BOE sooner. So, long GBPCAD may offer a soft hedge against a Fed hike in December. While this cross has rallied impressively this year, we still see some considerable upside – we target 2.06 by the end of this year and 2.14 in Q1-2016.” For more information, read our latest forex news.