USD/CAD still targets 1.3575 – Scotiabank

Eric Theoret, FX Strategist at Scotiabank, noted the pair’s bullish outlook, while its next target remains in the 1.3570 region in the near-term.

Key Quotes

“The outlook for relative central bank policy remains highly uncertain in the aftermath of the U.S. election, however the near-term risk appears to be one of renewed divergence as we note the steady rise in U.S. yields and renewed widening in U.S.-Canada interest rate differentials”.

“The 2Y spread ended Wednesday just above 30bpts and appears set to reach fresh multi-month highs at levels last seen in March”.

“Relative central bank policy appears dominant and the balance of risk appears to favor CAD weakness despite steady oil prices and a broader tone of risk appetite”.

“USDCAD’s intraday swings have delivered a sequence of higher lows over the past two sessions, initially around 1.3350 and drifting higher toward 1.3400. USDCAD appears set to attempt a near term break of 1.3450 with risk to 1.3480 and the election panic highs above 1.35. We continue to highlight the 50% retracement of the January-May decline at 1.3575”.

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