USD/CAD unlikely to go much farther than 1.34 - Westpac

Richard Franulovich, head of FX strategy at Westpac, suggests that the current grind higher in USD/CAD is unlikely to go much farther than 1.34+ even though it has retraced a portion of the sharp new year losses as the bounceback in oil prices stalls and market doubts about US/China trade negotiations resurface. 

Key Quotes

“The next BoC hike may be several months away but pricing remains very light, just +14bp priced in through to October 2019.”

“Mandated Alberta production cuts and OPEC supply agreements have helped place a floor on energy markets and the discount on Canada’s Western Select.”

“A likely dovish leaning FOMC next week and positive soundbites from US-China trade negotiations potentially a catalyst for some renewed USD/CAD downside next week.”