Analysts at Scotiabank explained that OIS is pricing roughly 20bpts of tightening for the October BoC meeting and slightly more than one full 25bpt hike by December.
Key Quotes:
“The 2Y U.S.-Canada spread is showing signs of stabilization.”
“Measures of sentiment are steady and pricing a relatively small premium for protection against CAD weakness and speculative CAD positioning appears to be shifting with Friday’s CFTC data showing a third consecutive week of short covering.”
“Near-term domestic risk lies with this week’s housing releases and Friday’s employment data.”
“USD/CAD short-term technicals: neutral-bearish.”
“Momentum indicators are bearish however their magnitude remains muted.”
“DMI’s are confirming the bearish trend and USD/CAD is threatening a break of its 100 day MA (1.2961) for the first time since mid-April.”
“We look to near-term support at 1.2950 and 1.2920. Near-term resistance is expected above 1.3020.”
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