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In view of FX Strategists at Scotiabank, the pair’s outlook points to the neutral/bearish side for the time being, eyeing resistance in the 1.3100/20 band.

Key Quotes

“Sentiment has offered support as market participants have responded to the improvement in the tone of NAFTA negotiations and the likelihood of an agreement into the fall. Domestic rate expectations are firm with OIS pricing nearly one full 25bpt BoC hike by December and the 2Y U.S.-Canada yield spread is hovering just above the psychologically important 60bpt level. Risk reversals are showing a material re-pricing in the premium for protection against CAD weakness, signalling a moderation in trade-related concerns. We are modestly bullish looking to CAD strength into next week’s monthly GDP and international merchandise trade data”.

“Trend and momentum indicators are modestly bearish as USDCAD consolidates Wednesday’s impressive decline. The weekly chart is bearish and follows last week’s shooting star and the key reversal completed in June. Recent congestion has centered around 1.3050 however we look to continued weakness toward 1.3000 and the 100 day MA at 1.2961. Near-term resistance is expected between 1.3100 and 1.3120″.