The Canadian dollar has been suffering quite a bit after the dovish stance from the BOC. However, the tables may now turn in favor of the loonie. Here are two opinions, one focusing on the fundamentals and one about the technical charts.
Here is their view, courtesy of eFXnews:
USD/CAD: A MACD Sell Signal On A Backdrop Of Oil Rally: Levels & Targets – Credit Suisse
Credit Suisse Technical FX Strategy Research discusses USD/CAD technical outlook noticing a MACD sell signal suggesting that the risk is lower for a move to the 38.2% retracement of the recent recovery and the top of the October bullish continuation pattern at 1.2598/85.
“And if CAD were to catch-up to the Oil rally, we would expect a move below 1.2585 in due course to target the 55-day average and 50% retracement at 1.2489/88, then price support at 1.2433.
Below here can see a sustained move lower, back to the September low and 50% retracement of the 2011/16 bull trend at 1.2060/48,” CS projects.
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USD/CAD: Vulnerable On Valuation & Positioning; Staying Short – TD
TD FX Strategy Research discusses USD/CAD outlook and trading strategy in light of TD’s recent addition for a short USD/CAD* position from 1.2770.
“Our read of valuation and positioning now look much cleaner.
Our HFFV estimate show USDCAD is trading with little bias but we also note that CAD has lagged the move in oil prices. The 90d rolling correlation of oil prices and USDCAD is now siting at cyclical lows, which leaves the pair sensitive to a break in the recent oil trading range.
On the positioning side, our preferred proxies also indicate that positioning is flat against a well populated long CAD trade a few months back argues.
In line with this view, TD maintains a short USD/CAD with a target of 1.2380.
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