TD Research discusses USD/CAD outlook and adopts a buy-on-dip strategy, looking to buy dips at 1.3250-13300.
"The backdrop continues to favor the USD across the G10, especially following this morning's lackluster data dump. CAD has also been a topical currency, reflecting some modest tailwinds on data and trade wars.
We discuss some of the drivers related to the cyclical and structural story...USDCAD runs a bit cheap to growth dynamics, suggesting that this momentum trade is likely to fizzle out like the rest over the past year," TD notes.
"In turn, we still think that USDCAD remains a buy on dips even though the newsflows has turned a bit more positive. For USDCAD, our preferred buy-in level sits between 1.3250/1.3300.
Still, the rally in USDCNH and scope for more two-way risks ahead of the G10 suggests that CAD should outperform some China proxies like SGD, TWD or AUD in the very short-run," TD adds.