FX Strategist at Scotiabank Eric Theoret noted the pair could surpass the 1.3500 handle in the near term.
“The post-Fed rally in CAD has been completely retraced, opening up the risk of further weakness toward the early March low”.
“Oil is dominating as yield spreads remain relatively steady with the U.S.-Canada 2Y hovering just below 50bpts. Oil prices appear vulnerable and renewed OPEC headlines are having a limited impact”.
“Measures of implied CAD volatility are elevated just below Wednesday’s April highs and risk reversals are pricing a greater premium for protection against CAD weakness. There are no domestic releases ahead of Friday’s CPI. We remain bearish CAD”.
“Momentum signals are unequivocally bullish and DMI’s are providing confirmation to the shift in the balance of risk. USDCAD appears poised to break above 1.35 with risk to the early March high in the mid-1.35s. Support appears limited ahead of 1.3420”.