Eric Theoret, FX Strategist at Scotiabank, noted the pair faces near-term resistance above 1.2750.
“Domestic risk is limited ahead of Wednesday’s speech from BoC Sr. Dep. Gov. Wilkins on the topic of ‘Monetary policy under uncertainty’. Wilkins is likely to maintain a cautious bias to policy tightening, echoing the recent tone from both Gov. Poloz and the October 25 policy statement. A reminder that October CPI data are scheduled for release on Friday, with headline inflation expected to soften to 1.4% y/y (from 1.6%). Oil prices and yield spreads are range bound, with WTI consolidating just below last week’s multi-year highs around $58/bbl. The 2Y U.S.-Canada spread has hovered around the midpoint of its May-September range since late October. We are neutral-bullish CAD, looking to modest near-term strength”.
“Momentum signals are neutral and trend strength is muted. Short-term MA’s remain bullishly aligned however we highlight the imminent crossing of the 9 day MA (1.2735) below the 21 day MA (1.2718). The descending trend channel from the late October high implies near-term resistance above 1.2750 and limited support ahead of 1.2600”.
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