USD/CAD outlook remains bullish/neutral – Scotiabank

FX Strategist at Scotiabank Eric Theoret noted the pair’s outlook remains bullish/neutral in the near term.

Key Quotes

“In terms of fundamentals, markets are pricing 5bpts of BoC easing over the next 12 months and the 2Y U.S.-Canada yield spread closed Friday at a relatively narrow 26bpts. Measures of sentiment are bearish, with risk reversals pricing a sizeable premium for protection against CAD weakness”.

“USDCAD appears unable to sustain any significant movement beyond 1.34, as its consolidates around the upper end of its multi-month ascending trend channel from May. Momentum signals are still moderately bullish, and short-term MA’s are aligned in a bullish manner. We look to near-term support at 1.3350 and 1.3320. Recent USDCAD gains have been short-lived above 1.3420, with considerable resistance above 1.3450”.

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