USD/CAD: near-term focus centered on the broader market tone - Scotiabank
|CAD is soft and trading just above the lower bound of its four month range. According to Eric Theoret, FX Strategist at Scotiabank, domestic risk is limited ahead of Friday’s monthly GDP for May, leaving the near-term focus squarely centered on the broader market tone.
Key Quotes
“CAD is trading in tandem with (softer) oil prices, and a renewed widening in the U.S.-Canada 2Y yield spread is likely to provide added pressure to CAD. Measures of sentiment are steady, and risk reversals suggest a modest premium for protection against CAD weakness across a range of time horizons. We maintain a bias to medium-term USDCAD gains toward 1.33 and 1.35.”
“USDCAD short-term technicals: bullish—USDCAD appears set to make an imminent break of its May 24 1.3188 high, opening up the risk of gains toward levels last seen in early April. Momentum indicators are bullish and trend indicators are providing confirmation. A break would shift the focus toward the major retracement levels of the January-May decline at 1.3312 (38.2% Fibo) and 1.3575 (50%, see middle chart).”
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