USD/CAD bearish near-term – Scotiabank

FX Strategists at Scotiabank noted the pair’s outlook remains on the bearish side in the short-term.

Key Quotes

“US-Canada rate spreads are at levels which were associated with spot nearer 1.40 earlier this year. We still view USDCAD as fundamentally undervalued in respect of these factors. That undervaluation extends to almost 3 big figures (or fully one standard deviation) from estimated equilibrium at 1.3481 this morning”.

“The drag from the crosses helps explain the persistently heavy tone on funds at the moment. The CAD is gaining ground on a number of important fronts—JPY, AUD and the EUR, for example”.

“USDCAD still can’t hold a bid; the move lower has essentially been one-way since late November and shows no sign of stopping”.

“Short-term trend momentum has strengthened and spot is heading for a test of retracement support at 1.3145 imminently. Below here and the broader bull channel trend at 1.3090/00 comes into focus”.