USD/CAD faces strong resistance above 1.2880 – Scotiabank

The pair is seen meeting an important hurdle in the 1.2880 area, according to FX Strategists at Scotiabank.

Key Quotes

“The passing of the U.S.’s NAFTA renegotiation deadline appears to have had a limited impact on the currency, and talks are expected to now extend into 2019. Commodity prices remain elevated and continue to provide a critical source of support for the CAD. Terms of trade are dominating and Bank of Canada rate expectations have firmed considerably with OIS now fully pricing 25bpt hikes for July and October, as well as a 50% chance of an additional hike by the end of the year. Our current USDCAD fair value estimate is close to 1.2480”.

“Momentum signals are neutral and trend strength is muted as USDCAD continues to consolidate around its 50 day MA (1.2827). We highlight the importance of recent support around the 200 week MA (1.2763) and note the absence of additional support between 1.2750 and 1.2600. Near-term resistance is expected above 1.2880”.

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