USD/CAD bullish-neutral near term – Scotiabank

Eric Theoret, FX Strategist at Scotiabank, noted the pair could advance to the 1.3600 area in the short term.

Key Quotes

“Broader developments remain dominant in the absence of domestic releases, with a focus on interest rate differentials and oil prices. The 2Y U.S.-Canada spread has narrowed in a CAD-positive manner, softening back to 50bpts on the back of an impressive shift in expectations for the BoC. OIS are now pricing over 8bpts of tightening over the next 12 months, nearly doubling in the span of a week. Oil prices have also shown signs of stabilization around their recent lows. We remain biased to CAD weakness on the basis of relative central bank policy”.

“Bullish trend and momentum signals are softening and USDCAD is testing its 9 day MA (1.3441) for the first time since late February. However, USDCAD declines have been shallow with recent support observed around 1.3420. We remain medium-term USDCAD bulls, looking to gains through 1.36 toward the mid-1.38s”.