Currently, USD/CAD is trading at 1.2686, up 0.33% on the day, having posted a daily high at 1.2699 and low at 1.2627.
USD/CAD is higher despite the weakness in the greenback and recent BoC hawkishness, (domestic rate expectations are firm with OIS pricing in roughly 25bpts of tightening over the next 12 months), while WTI dips lower on the $46 handle. However, analysts at Scotiabank argued that CAD’s vulnerability to a positioning adjustment has diminished considerably, with Friday’s CFTC data showing another week short covering pushing the net position to its least bearish since first dropping into net short territory in mid-March.
The analysts at Scotiabank suggested that USD/CAD's short-term technicals remain bearish, albeit with caution. "Momentum indicators are impressively oversold. The RSI is at fresh multi-year lows at levels last seen in 2007. USD/CAD has broken through all of the major support levels ahead of the May 2016 low at 1.2461 and is now trading within the daily range of the May 3, 2016 candle. Near-term resistance is expected between the 1.2720-1.2750 area," explained the analysts at Scotiabank.
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