USD/CAD points to further gains – Scotiabank

Eric Theoret, FX Strategist at Scotiabank, noted the bullish perspective of the pair in the short term.

Key Quotes

“Fundamentals favor CAD weakness as we look to relative central bank policy, the renewed widening in the 2Y U.S.-Canada yield spread, and expectations for a decisively neutral BoC against a tentatively hawkish Fed. Measures of CAD sentiment have remained remarkably steady through this most recent period of risk appetite, and risk reversals have failed to fade any meaningful portion of the late-June build in the premium for protection against downside risk. We maintain a bias to CAD weakness”.

“USDCAD has fully faded Monday’s rally to a fresh one month high, however its technical picture remains biased to gains as we consider the combination of bullish trend and momentum indicators. The rising trend channel off the May-June lows is well defined, and USDCAD continues to trade above its 100 day MA (1.2995). We look to near-term support around 1.30 and highlight the absence of significant resistance between 1.3150 and 1.33”.