Forex Flash: USD/CAD in pullback to 1.0255/60 and maybe 1.0200/10 – TD Securities

The BoC managed to find a way to hold onto their mild hawkish bias, but rate hikes are now even more distant over the horizon.  “While the CAD sold off sharply on the announcement, the ‘lower for even longer’ message was not entirely surprising considering the string of weak Canadian data recently, and the fact that USD/CAD did not manage to make new highs for the year suggests some softening of the hawkish language was already priced in”, wrote analysts Shaun Osborne and Greg Moore, expecting tomorrow’s employment report to show more give-back of the strong increases in the final quarter of 2012. 

In regard to the USD/CAD, TD Securities analysts are now forecasting a peak in Q2 2013 at 1.06. For now, "inability to make new highs yesterday suggests the rally has lost some steam and increases the potential that we see a pullback in the coming days (without another strong catalyst—i.e. very weak employment)", they wrote, pointing to support at 1.0255/60 and a more solid one at 1.0200/10 area. "More broadly, we continue to look for an extension toward 1.0450 in the coming weeks", they added.