USD/CAD neutral/bearish near term – Scotiabank

Eric Theoret, FX Strategist at Scotiabank, believes USD/CAD could attempt a visit to the low-1.2400s in the near term.

Key Quotes

“Domestic rate expectations have firmed modestly on the back of Tuesday’s retail sales data with OIS pricing roughly 21bpts of tightening for October. The 2Y U.S.-Canada yield spread is steady at 5bpts and oil prices are quiet in the upper $47/bbl area. The EIA oil inventory data are scheduled for 10:30am ET. We remain near-term CAD bulls”.

“Daily signals are modestly bearish however the shorter-term hourly charts are suggestive of moderation. The near-term range appears relatively tight as we note recent support under 1.2550 and resistance above 1.2600. We await a break, looking to the July low in the lower 1.24 area. Further resistance is expected at 1.2650”.