USD/CAD inter-markets: rangebound ahead of further gains?

USD/CAD is so far following the rest of the global markets today, alternating gains with losses around the 1.3360 region and waiting for the final results from the US elections.

CAD remains underpinned by favourable US-CA 2-y spread differentials today, showing some decoupling from crude oil dynamics as of late and alleviating at the same time the increasing upside pressure via the more demanded greenback.

In fact, yields in the Canadian money markets keep the upside momentum vs. the mixed performance from their US peers. Fed Funds future prices have bounced off recent lows, signalling the probability of a Fed’s rate hike at above 71% when assessed by CME Group’s FedWatch tool.

In line with recent election polls, that is, assuming a victory of H.Clinton, the greenback is expected to pick up further traction, paving the way for another test of recent multi-month peaks above the 1.3400 handle. Further north, there is not much in terms of significant hurdles, with the retracements of the 2016-drop emerging at 1.3575,1.3839 and 1.4165, ahead of multi-year tops just below 1.4700 the figure recorded in January.

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