USD/CAD stays neutral near term – Scotiabank

FX Strategist at Scotiabank Eric Theoret noted the outlook on the pair stays neutral for the time being.

Key Quotes

“Domestic rate expectations have firmed in response to Friday’s dual employment release showing impressive wage growth in both Canada and the U.S. The U.S.-Canada 2Y spread is steady and near-term domestic risk is elevated as we look to the release of housing starts and building permits (8:15/8:30am ET). BoC Deputy Gov. Wilkins is also scheduled (2:00pm ET) to participate in an IMF panel discussion on the topic of risk and stress testing. Friday’s CFTC data showed an extended bullish net long CAD position, unchanged w/w at multi-year highs”.

“USDCAD appears range bound between the mid-upper 1.24s and 1.2600, with support around the 50 day MA (1.2465) and the 23.6% retracement of the May-September decline at 1.2471. Momentum signals are only modestly bullish and are already showing signs of exhaustion. Trend strength remains weak. We look to resistance at 1.2620 and 1.2720”.