Canadian dollar steadies as a prudent market decides it is not a good idea to over-extend ahead of Greek elections

Details

Published on Friday, 15 June 2012 13:40

Written by Sam Coventry

"In addition, next week’s Fed meeting is likely to appear particularly dovish when pitted against the BoC’s relatively hawkish tone, also supporting CAD" - Camilla Sutton at Scotiabank.

Where to for the Canadian dollar next week? We hear from three analysts on the near-term outlook: (Latest FX forecast tables just published on our IMT site, access is free via this Facebook entrance).

UniCredit note that the three dollars (Australian dollar, New Zealand dollar and Canadian dollar) have held the line well enough so far, reflecting market prudence not to take heavy positions ahead of the Greek elections and the other key dates for markets scheduled next week:



"Caution was also the message coming from the RBNZ meeting, which left the OCR steady at 2.50% and reaffirmed that stimulatory policy is still appropriate given the worsening world economic and risk picture. However, the relative steadiness of these three currencies should give way to some extent to more volatile behavior in the near term, reflecting global uncertainty. Usually sensitive economic data releases like GDP in New Zealand or inflation in Canada are also likely to have negligible impact at the moment."

Camilla Sutton at Scotiabank sees the Canadian dollar holding the advantage:

"CAD has had a narrow range in the European and Asian sessions of just 26 points and is entering the NA session flat to yesterday’s close. Today’s domestic data is manufacturing sales (cons. 0.2%m/m) and important for how it feeds into GDP; however it is global markets and the broader move in the USD that is currently driving CAD traders.

"Markets appear to be stabilising on both a risk and pricing front, which is positive for CAD.

"In addition, next week’s Fed meeting is likely to appear particularly dovish when pitted against the BoC’s relatively hawkish tone, also supporting CAD."

Calling Canadian dollar strength

Over at Westpac, the Canadian dollar is also in favour:

"CPI and retail sales (both Fri) though neither will carry much weight amid the Greek election and the FOMC.

"Bias: USD/CAD is a good sell into recent 1.04+ highs, if seen, amid building hopes for ECB, EU Leaders and Fed policy action in the next couple weeks.

"AUD/CAD approaching long term sell zone into 1.03-1.04."