AUS: Canadian dollar: CAD is higher today but slow global growth and soft commodity prices remain a challenge
"The bigger picture still looks USD-bullish to us though and we think the USD should remain well supported on dips" - Shaun Osborne at TD Securities.
The Canadian dollar (Currency:CAD) has gained 0.3% against the US Dollar since yesterday’s close and performing in line with the other commodity currencies.
The pound to Canadian dollar exchange rate is essentially unchanged at 1.6032. (Please visit our IMT site for the latest FX forecasts, access via this Facebook entrance path).
"Rumours of a potential summer rate cut from China have helped to spur commodity currencies; especially as it provides further evidence that China plans to support growth and increases the likelihood of a soft landing," says Camilla Sutton at Scotiabank.
However, on a more negative note, Moody’s warned that changes to Canada’s mortgage market might be too little too late leaving the Canadian consumer relatively vulnerable.
"There is no domestic data today and no tier one data until Friday’s GDP release. Accordingly it is likely that CAD will take its cues from broader market developments. Today’s USD-CAD range is likely to fall between 1.0220 and 1.0300," says Sutton.
Taking a decidedly sanguine view of the Canadian dollar is Shaun Osborne at TD Securities:
"And, as investors consider Europe’s issues, slow global growth and soft commodity prices remain a challenge for the CAD. Oil prices have steadied but WTI remains below $80 despite lingering supply concerns.
"The CRB index remains precariously poised around support just below the 270 level.
"Even if expectations are relatively low ahead of the EU summit, a disappointing outcome is still likely to weigh on confidence and growth prospects and risk assets – the CAD – by extension. The CRB index easing below 265 would indicate the risk of a further 10% or so slide in the broader commodity complex from a technical point of view."
TD Securities still favour the US dollar over the Canadian currency currency.
"The bigger picture still looks USD-bullish to us though and we think the USD should remain well supported on dips to the low/mid 1.02 area as a result. Resistance on the day is 1.0300/10," says Osborne.
