USD/CAD outlook stays neutral-to-bullish – Scotiabank
|According to FX Strategist at Scotiabank Eric Theoret, USD/CAD’s stance remains neutral-to-bullish in the short-term horizon.
Key Quotes
“The BoC policy decision is now less than two weeks away and key policymakers have maintained a remarkably dovish tone with recent comments from both DG Schembri and Governor Poloz highlighting ongoing concern about the economy’s material excess capacity”.
“Market participants have taken note, and 12 month OIS have halved the extent of tightening priced as recently as mid-March (from 8bpts down to 4bpts currently)”.
“We see risk in an extension of the anticipated closing of the output gap (mid-2018 as of the January MPR) and maintain a bearish CAD outlook. A reminder that the 2Y U.S.-Canada spread is hovering just below the January 2016 high”.
“Momentum signals are neutral, DMI’s are muted, and trend strength is remarkably weak with an ADX pushing below 14. The path from mid-March has been modestly bullish with a sequence of higher lows and higher highs. We note the importance of near-term support at 1.3320 and look to sustained gains through the recent highs above 1.34”.
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