USD/CAD keeps the bullish tone in the medium term – Scotiabank

FX Strategist at Scotiabank Eric Theoret noted the pair’s outlook remains on the bullish side in the medium term.

Key Quotes

“The 2Y U.S.-Canada yield spread appears to have stabilized around 25bpts and oil prices (WTI) are consolidating just above $50/bbl, leaving CAD range bound. The Fed narrative remains key, as markets have yet to fully price the likelihood of a December rate hike. We look to further CAD weakness on the basis of the broader USD’s trajectory into year-end”.

“USDCAD has softened back through its 200 day MA (1.3190) following Thursday’s clear break and close below 9 day MA (1.3219) support. We note the potential for near-term weakness toward Monday’s low around 1.3150, with risk to 1.3120, however we maintain our bullish medium-term view on the basis of the bullish trend from May with a well-defined sequence of higher lows and higher highs”.