USD/CAD stays neutral short-term – Scotiabank

In opinion of Eric Theoret, FX Strategist at Scotiabank, the pair keeps the neutral bias in the near term horizon.

Key Quotes

“Relative central bank policy remains dominant and the 2Y U.S.-Canada yield spread remains elevated around 50bpts. Measures of implied CAD volatility are showing signs of a broad turn, rising from last week’s multi-year lows. However risk reversals are still pricing a remarkably low premium for protection against CAD weakness. We remain medium-term CAD bears”.

“Momentum signals are neutral, DMI’s are muted, and the ADX is trendless. USDCAD is consolidating just above the 100 day MA (1.3297), a crucial support level that has yet to be broken on a closing basis. We await a break of the recent range roughly bound between the mid-1.32s and 1.34”.