USD/CAD bullish near-term – Scotiabank

FX Strategist at Scotiabank Eric Theoret noted the pair keeps the bullish outlook unchanged in the short term.

Key Quotes

“Interest rate differentials have been a key driver for CAD over the past two weeks. Friday’s CPI disappointment has softened expectations for BoC policy, nearly eliminating the 5bpts of tightening (12 month horizon) that OIS had been pricing in throughout most of January. We remain CAD bears on the basis of relative central bank policy, looking to a neutral BoC and a ‘gradually’ hawkish Fed”.

“USDCAD has completed a bullish outside reversal on the weekly charts. Daily momentum indicators have faded their bearish bias and have shifted to neutral. Near-term support is expected around 1.3250 and we look to gains back toward the recent high just below 1.3400 and the mid-point of the 2016 range”.