USD/CAD to soar towards the 1.26 level by the end of the month – Rabobank

In the view of Christian Lawrence Senior, Cross-Asset Strategist at Rabobank, the USD/CAD pair is set to test the 1.2575 mark ahead of a return to a region of price stickiness around 1.2650.

Key quotes

“We see room for the current correction in oil to continue with around 5-7% more downside in our sights over coming sessions. This further downside in oil should translate to a retest of the 1.2575 level in USD/CAD and our base case remains a 1.26 print by the end of the month.”

“USD remains at the mercy of real rates and equity performance which are themselves of course closely linked. We could see continued whip saw movements as the market hear more from the Fed with no fewer than seven speeches scheduled next week alone. In the short-term, however, momentum is firmly on the side of a continued bear steepening of the UST yield curve and an accompanied increase in real yields as breakevens struggle to continue forging new record highs.”