• 
• See all for FXstreet.com
• View Print Version

FXstreet.com (Barcelona) - HSBC Strategists believe that CAD should fair well ahead, aided by dovish Fed commentary and improving US data, and strong Canadian employment data is helping to offset weaker signals on activity.

The team notes that USD/CAD has had the most potent correlation with the S&P 500 over the past year in the G10 FX space, and the same data for the last month shows the relationship is becoming more evident (-0.81).

However, they see that the CAD net long is not as stretched as in September 2012, and their momentum indicators for the pair are downward across long, medium and short term horizons. They feel that a break below 0.9820 would open a challenge of 0.9735-

They finish by writing, "The approaching BoC meeting (23 Jan) should not have much of an impact, as the message is that rates are not likely to be cut despite some temporary slowdown in activity, but nor are they likely to be raised any time soon. The OIS market has attached only a 20% probability to a 25bp hike in the next six months, a stance consistent with the likely repeat message from the BoC."

Related Forex and Currencies Articles

• 
  U.S stocks end mixed on manufacturing data; Dow gains 0.06%
  5/24/2013 01:25 PM
• 
  Forex - Dollar erases gains earned on factory data, dips as stocks rise
  5/24/2013 11:25 AM
• 
  Gold falls as order for U.S. durable goods surprise on upside
  5/24/2013 10:25 AM