Flash: CAD shorts to get ‘cleared out’ over the week? - BMO Capital Markets

FXStreet (Barcelona) - Stephen Gallo, European Head of Currency Strategy at BMO Capital Markets notes that USD/CAD has not generally traded with a ‘healthy’ tone for most of the London morning, with the number and size of down moves (10 mins) tending to outpace the up ones.

Key Quotes

“Strategically, we’re a near-term opportunistic seller of the pair on rallies below 1.108-1.110, just like the case on Monday and Tuesday.”

“At this stage we are remaining patient regarding our medium-term bullish view on the pair, and we won’t look to resist a further ‘clear-out’ of CAD shorts over the balance of the week. We’ll look to get short USD/CAD on a test/break of 1.104, which should open the possibility of a further near-term correction to 1.097-1.100.”

“We still look to that range as a good area to buy the pair for another medium-term leg higher. The BoC still can still jawbone for a weak CAD even with moderate growth, and CAD longs/shorts will be in an even better ‘balance’ on a move to the 1.095-1.100 range.”

“We won’t really start to get nervous about our medium-term bearish CAD view until the pair spends a number of weeks below 1.100.”