Forex Flash: USD/CAD correction complete, aiming at 1.02/1.03 – TD Securities

The USD/CAD is getting ready for the US NFP data: "Modestly softer US numbers (there are no Canadian releases) should be mildly CAD-negative and encourage a further recovery in USD/CAD back above parity", wrote analysts Shaun Osborne and Greg Moore, pointing also to more CAD correlation to WTI (slightly lower) and Canada-US short-term rate spreads (a little firmer in the CAD’s favor) instead of the usual risk assets (stocks, EZ sovereign spreads).

"On the charts, yesterday’s tumble in funds effectively closed the 0.9955/65 gap on the short-term chart that was left open after last week’s blast higher. The 0.9958 level is also the 50% retracement of the 0.98/1.01 January move up", they added, believing that the near term corrective move lower in the USD/CAD is complete. "A move through 1.0003—short-term channel/break out resistance would help support potential for a resumption of the near-term move up", the continued, bullish on the cross and aiming at 1.02/1.03.