USD/CAD: Buying with target at 1.4650 – TDS

After a major turnaround, the recent USD retreat looks complete and has now flipped broadly cheap on the HFFV metric of analysts at TD Securities, who recommend buying the USD/CAD pair. 

Key quotes  

“While policymakers have aggressively acted, we think markets will need to see contagion peak before risk assets can truly find a bottom. Indeed, history tells us we are not out of the woods yet.”

“We think the CAD is uniquely positioned to suffer. 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.”

“Government support is welcome, but it will not prevent second round effects of defaults/bankruptcies. Further, household balance sheets are more indebted now than they were in 2008. This means that the consumer will not be able to bail out the economy as it did then.”

“Entry Level 1.4050 Target Level 1.4650 Stop-Loss 1.3725.”