USD/CAD cautiously bullish – Scotiabank
|In opinion of FX Strategists at Scotiabank, some signs of exhaustion appear to have emerged following the recent bull run.
Key Quotes
“The outlook for relative central bank policy is set to dominate this week as market participants look to Wednesday’s Fed meeting and adjust their expectations for tightening in 2018. Domestically, rate expectations are stabilizing in the aftermath of last week’s trade tensions and speech from Gov. Poloz. OIS are now pricing roughly 7bpts of BoC tightening for April and 23bpts by July, and the 2Y U.S.-Canada spread is testing fresh 9-month highs just below 55bpts. Risk reversals are elevated, and pricing a sizeable premium for protection against CAD weakness. Domestic risk is limited ahead of Thursday’s public appearance from BoC Sr. Dep. Gov. Wilkins and Friday’s CPI/retail sales data. CAD remains vulnerable to near-term weakness however we maintain a constructive medium-term view, looking to CAD strength into the spring/summer period”.
“Trend and momentum indicators are bullish however we are seeing some signs of exhaustion and specifically highlight the negative divergence in the RSI—not confirming the latest highs in spot. Shorter-term charts are showing signs of a decisive turn from resistance in the 1.3120 area, and we continue to highlight the importance of the 61.8% retracement of the May-Sept 2017 decline at 1.3132. Near-term support appears limited between 1.3050 and 1.2950”.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.