FX Strategist at Scotiabank Eric Theoret expects the pair to retake the mid-1.3400 area in the short-term.
“The outlook for relative central bank policy remains dominant and the 2Y U.S.-Canada yield spread remains a headwind for CAD. Schembri is likely to maintain a decisively neutral tone in an effort to push back on the modest tightening bias currently priced into OIS markets—roughly 5bpts over the next 12 months. We look to medium-term CAD weakness”.
“Momentum signals are neutral and the 100 day MA (1.3299) remains an important level of support. We look to a continued retracement of last week’s decline with expectations of gains through 1.3380 toward the mid-1.34 area”.
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