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In opinion of FX Strategists at Scotiabank, the pair remains neutral in the short-term horizon and eyes a potential congestion between 1.3020 and 1.3080.

Key Quotes

“The outlook for relative central bank policy has deteriorated on the back of worrisome oil price developments and this week’s disappointing housing data. Yield spreads have widened in a CAD-negative manner and the price of Western Canada Select has extended its decline to fresh two year lows nearing $25/bbl. Broader developments are set to remain dominant ahead of Monday’s Bank of Canada Business Outlook Survey, a key consideration for policymakers heading into the October 24 rate decision and MPR forecast update. Measures of implied CAD volatility are rising broadly and lifting the premium for protection against CAD weakness. The 1Y risk reversal is at its highest level since June 2017″.

USDCAD has reached anticipated resistance around 1.3050 and the 100 day MA. Shorter-term (hourly) charts are suggestive of exhaustion following an impressive rally from the upper 1.27s and we look to near-term congestion between 1.3020 and 1.3080. Additional resistance is expected around the descending trend line drawn from the June-September lows, at 1.3150. A break below 1.3020 would likely find additional support at 1.2950″.