USD/CAD bullish/neutral short term – Scotiabank

According to Eric Theoret, FX Strategist at Scotiabank, the pair’s outlook remains bullish/neutral in the near term.

Key Quotes

“CAD drivers are somewhat conflicted at the moment, as downward pressure from oil prices (WTI flirting with $40/bbl) is offset by support from relatively narrow yield spreads (U.S.-Canada 2Y slightly wider than 10bpts). Measures of implied CAD volatility are softening, and risk reversals are responding with a slight moderation in the premium for downside protection”.

“Bullish trend and momentum signals have softened back to neutral, and USDCAD is testing support around its 21 day MA (1.3057) as well as the descending trend line off the May-June highs. The broader, multi-month technical picture remains bullish as we consider the sequence of higher lows from May and USDCAD’s recent test of fresh multi-month highs. We look to gains toward 1.33 and 1.35”.