CAD: Next major upside target is near 1.3840 - BBH

Analysts at Brown Brothers Harriman, explained that since reaching almost CAD1.36 on November 14, the US dollar has been consolidating its gains against the Canadian unit.   

Key Quotes

“The US interest rate premium continued to widen even though the greenback failed to extend its recent gains against the Loonie.  Both the two and 10-year premiums are moving back toward the extremes set at the start of the year.”

“The sharp drop in oil prices ahead of the weekend weigh on Canada, and helped lift the greenback to test a short-term down trend line drawn off the November 14 and November 18 highs. It came in near CAD1.3540 ahead of the weekend and caught the high.  It caught the high, which was recorded late in the session.  We note that the CAD1.3575 area represents a 50% retracement of the US dollar's slide since the multi-year high was set in January.  That slide looks corrective in nature, but in any event, the next major upside target is near CAD1.3840.”