USD/CAD keeps the bearish outlook – Scotiabank

FX Strategist at Scotiabank Eric Theoret keeps a bearish albeit cautious perspective on the pair.

Key Quotes

“Bearish momentum signals are moderating along with DMI’s and risks appear to be shifting as we note the sequence of higher USDCAD lows since Wednesday”.

“Near-term support is expected at 1.27 around Thursday’s low, with additional support anticipated at 1.2680. Resistance is limited ahead of 1.2780. Note that USDCAD ranges have been remarkably tight since Tuesday, increasing the risk of a violent break”.

“The shift in drivers has been notable, forcing CAD to diverge from its prior relationship to yield spreads”.

“We maintain a bearish CAD bias on the basis of relative central bank policy and note the potential for a compounded move in response to further weakness in oil”.