USD/CAD capped on recent 100 pip rally to fresh 15-month highs
Currently, USD/CAD is trading at 1.3737, up 0.41% on the day, having posted a daily high at 1.3759 and low at 1.3649.
USD/CAD has been capped on the bid approx 100 pips higher from take off down at 1.3660. The key to the loonie at this juncture is that fact that interest rate differentials continue to widen in a CAD-negative manner and indeed, CFTC CAD positioning is bearish with gross shorts holding a near-record position. Simply, the market is bearish on the CAD and when you bring in the price of oil and an overheated property market, risks remain tilted tot he downside for the loonie while the greenback remains in familiar wide range at the lower end of the 100 handle, albeit suffering that downtrend in April. The recent recovery fro below the 99 handle is fuelling a bid in USD/CAD currently.
"BoC Gov. Poloz is scheduled to speak on Thursday in Mexico City with a speech topic titled ‘Canada and Mexico: Common Issues in Uncommon Times’," explained analysts at Scotiabank, adding, "the discussion is likely to touch upon the ‘significant uncertainties’ that have been highlighted in recent BoC policy statements and could deliver additional CAD pressure via sentiment."
USD/CAD levels
The same analysts at Scotiabank explained that they continue to highlight the absence of any meaningful resistance between 1.3700 and the mid-1.38s. Therefore, a break higher through the 1.38 handle brings about 13 Feb high 2016 at 1.3858 and 1.3925 23rd Jan highs 2016. to the downside, 1.3636 and 1.3409 are supports on the wide.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
