USD/CAD has continued to head higher and broke through the key psychological level of 1.30, notes Morgan Stanley.
"Weak room for further monetary easing this year, driven largely by the second round negative effects on the economy from a lower oil price, means we expect CAD to weaken further, targeting 1.34," MS projects.
"Increased global oil production runs the risk of weakening oil prices further, which would weaken the CAD. The impact of declining terms of trade in an already weak economy keeps us bearish," MS adds.
On the technical front, MS also sees further upside for USDCAD. In particular, it is in the 3 rd sub-wave within a larger 3rd wave.
"We target 1.34 initially. We would put a stop in a new long position at 1.28, just above the 1 st wave top, since a move below here would suggest that the current wave count needs reevaluating," MS advises.
MS maintains along USD/CAD position from around 1.2540 with a target at 1.34, and a revised profit-stop at 1.2820.
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