Forex Flash: USD/CAD with scope for broader up move with limited corrections – TD Securities

The Canadian Dollar continues its recent sub-par trend, being the worst-performing currency in the G-10 block this morning. “Funds closed above 1.01 Monday for the first time since last July and though that likely reflects the very quiet trading seen in holiday-thinned markets to a degree, it sustains the trend of CAD softness seen over the recent past in response to softer Canadian data”, wrote analysts Shaun Osborne and Greg Moore, pointing to the recent undertone as consequence of soft Canadian housing trends amid ongoing domestic  imbalances (after last week’s IMF reported noted that housing prices remained somewhat over-valued and more measures might be needed to curb debt). "Foreign investors are perhaps looking at the Canadian outlook with a more cautious eye now amid concerns that much of the good news is priced in", they added.

So, the USD/CAD is expected to continue rising in the near-to-medium term as technical position of the market looks very constructive for the USD. "We also think that the move up in funds will breath a bit more life into a broader basing formation that has been in development in the past few months—after the rally from September's low and the consolidation through the turn of the year, the January push through channel (bull flag) resistance on the daily chart targets a push up to 1.0300/50 we think", wrote the TD Securities analysts, seeing scope for a broader up move and limited corrections.