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Economists at Credit Suisse look to fade any ensuing USD/CAD rally, with the January 2018 low of 1.2251 being an attractive entry point for USD/CAD shorts, aiming for 1.1920.

Fundamentally constructive on the loonie

“We fundamentally remain constructive on CAD, as we continue to view the currency as uniquely supported by a combination of strong internal and external demand, buoyant terms of trade and a fairly hawkish central bank.”

“while we see value in pointing to what might cause near-term consolidation, we are also of the view that rallies in USDCAD towards 1.2250 should be sold, with a target of 1.1920 (15 May 2015 low).”  

“If this and next week’s events surprise instead in a constructive direction (e.g. CPI data print well above consensus, or Governor Macklem explicitly pushes back against questions on CAD strength), the possibility of a breach below 1.1920 in USD/CAD becomes more pressing in our view.”