Strategists cite improved Canadian growth data as justification for a retracement in USD/CAD below 1.40 within two months.
TD Securities strategists have adopted a more constructive outlook on the Canadian Dollar (CAD), targeting a move below 1.40 in USD/CAD over the next two months. The view follows recent improvements in Canadian economic data, which they argue have been overlooked by markets overly focused on downside risks.
The strategists note that USD/CAD has been trading at elevated levels post-FOMC, with spot last sustaining levels above 1.42 only during periods of heightened tariff risks in 2023. They implemented a 2-month 1.4050/1.39 put spread to express their view, expecting a data-driven retracement as pessimism on Canada’s growth outlook fades.
No immediate market reaction was specified, but the position reflects confidence in CAD strength amid improving fundamentals.