23 Jul 2014
USD/CAD making hard work of upside -TD Securities
FXStreet (Guatemala) - Shaun Osbourne, Chief FX Strategist at TD Securities explained that they thought USD/CAD had a chance of rallying this week but the markets are making hard work of it, even as the USD picked up more obviously elsewhere yesterday.
Key Quotes:
"We thought USD/CAD had a chance of rallying this week but the markets are making hard work of it, even as the USD picked up more obviously elsewhere yesterday”.
“Spreads in the belly of the curve continue to move in USD/CAD-supportive manner, with the 5-year bond spread reaching +20bps for the first time since September 2007 this week as Canadian yields slip back."
"That would be a little more relevant for the spot market if USD/CAD was correlating a little more tightly with yield differentials, but CAD correlations for a range of assets—commodities through volatility—are slackening again and seem to have little pull on the CAD’s direction at the moment”.
“Out-performing Canadian bonds and a resilient CAD suggest that investment flows may be underpinning the currency to some degree”.
Key Quotes:
"We thought USD/CAD had a chance of rallying this week but the markets are making hard work of it, even as the USD picked up more obviously elsewhere yesterday”.
“Spreads in the belly of the curve continue to move in USD/CAD-supportive manner, with the 5-year bond spread reaching +20bps for the first time since September 2007 this week as Canadian yields slip back."
"That would be a little more relevant for the spot market if USD/CAD was correlating a little more tightly with yield differentials, but CAD correlations for a range of assets—commodities through volatility—are slackening again and seem to have little pull on the CAD’s direction at the moment”.
“Out-performing Canadian bonds and a resilient CAD suggest that investment flows may be underpinning the currency to some degree”.