Forex Investment and Currency Trading

The CAD is off to a softer start against the USD this morning as risk aversion rears its head across the broader markets again, driving investors back towards the JPY and the USD “safe havens”. Short term trends will be determined by the markets broader risk appetite – slim this morning, so a net negative for the CAD – but beyond that, flows (month end), data (January GDP tomorrow) and BoC-speak (Governor Carney today) will also influence the CAD to a large extent. With month end flows perhaps lifting the CAD and GDP expected to be poor, short term trends are liable to be very choppy. Governor Carney could add to the mix if his remarks give any further clues on BoC thinking with regard to QE policy. Overall, there is limited downside for USD/CAD in the short term, and, after the recent short term failure to push under 1.22, the risk seems to be for a retest of the 1.2700/30 region. Strap in, it is going to be a bumpy ride.