According to Tim Riddell, Research Analyst at Westpac, USD/CAD is likely to remain range bound, but the pressures of both trade spats with US and slippage in the oil complex could force a redefining of recent range resistance at 1.3600.
“The spectre of Trump’s tweets and policy focus shifting towards trade with Canada have seen a sharp reversal in CAD’s post-BoC policy meeting strength.”
“The prospect of a US/Canada “dairy war” has highlighted the dependency of the Canadian economy on its southern neighbour. A renegotiation of NAFTA could undermine the still-vulnerable nonresource sector, the sector that seems to be of most concern to the BoC.”
“Any further pullback in the strength of the oil complex would also expose the recently firm resource sector in Canada. A WTI slide below 50.00 could trigger a deeper fall in CAD.”