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Forex pairs in this Article » EUR/USD (Bali) - There will be three key developments in the coming weeks and months, pivotal for the CAD’s short term fate, in view of Greg T. Moore, FX Strategist at TD Securities.

Key Quotes

"First, is expectations on the Fed’s QE program. This week revealed another solid run of US data that further reinforced the progress of the recovery and brought forward tapering expectations. That trend will be watched closely, and in particular, if we see a strong US jobs report tomorrow and a more hawkish sounding Fed in two weeks, USD/CAD should continue to be well supported."

"Second, the Bank of Canada sounded unambiguously more dovish with its statement this week. The Bank looked through the stronger than expected Canadian growth in the third quarter and noted that household debt remained stable. Instead, the key issue that they highlighted was the even greater downside risk to inflation."

"Third, the CAD’s recent slide has caught up with the fall in commodity prices since early September, and according to our relative value model (in which commodities are a key variable) USD/CAD is near its short term ‘fair value’ (close to 1.07). The outlook according to our commodity strategy colleagues, however, continues to point flat or lower for much of the sector in the coming months. All else equal, if that is the case, it is hard to see a reason for a substantial CAD-rebound."
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