Eric Theoret, FX Strategist at Scotiabank, noted the pair could extend its sideline theme in the near term.
Key Quotes
“Near-term risk lies with the broader tone and its impact on sentiment. Domestic rate expectations continue to soften and the 12 month OIS has fallen to its lowest level since early September. The 2Y spread is elevated, and risk reversals hint to a creeping rise in the premium for protection against CAD weakness. The near-term balance of risk favors consolidation within the October range”.
“USDCAD has returned to its 50 day MA (1.2440), a crucial level of support on a month-to-date basis. Momentum signals are neutral, DMI’s are muted, the ADX is trendless, and short-term MA’s have flat-lined. We await a break of the October range roughly bound between the mid/lower 1.24 area and 1.2600, with further support expected at 1.2420 and 1.2380”.
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