USD/CAD retreat is complete, next target is 1.4650 – TDS

US dollar pullback from March highs at 1.4660 area might be complete, according to the FX analysis team at TD Securities. The experts see the CAD suffering on the outcome of the COVID-19 crisis.

Key quotes

“After a major turnaround, the recent USD retreat looks complete and has now flipped broadly cheap on our HFFV metric.”

“Beyond the sudden stop nature of this crisis, the CAD has the added drag of an oil terms of trade shock. Our commodity strategists are particularly concerned that this will persist for some time.”

“We reckon that as data becomes more available over the next several weeks, USDCAD will eventually need to adjust higher to reflect the new growth reality/outlook. This puts a re-test of the 1.45/47 ranges observed in 2016 as inevitable as the oil shock compound CAD's woes and USD funding issues persist.”