USD/CAD neutral stance near term - Scotiabank

FX Strategist at Scotiabank Eric Theoret noted the pair’s stance has shifted to neutral in the short-term.

Key Quotes

“The broader tone is delivering added support to CAD, and near-term risks appear to be balanced to the upside”.

“Domestic developments are likely to be in focus throughout the week as we look to Wednesday’s trade, two public appearances from BoC Sr. Dep. Gov. Wilkins (Thursday/Friday), and Friday’s Business Outlook Survey”.

“The 2Y U.S.- Canada yield spread remains wide, around 25bpts, however its influence on CAD appears to have been eclipsed by the move in oil prices. OIS have moderated the extent of anticipated easing over the next 12 months, pricing 5bpts (20% likelihood of a 25bpt rate cut)”.

“Momentum signals are neutral, the ADX is trendless at 12, and USDCAD has pulled back to support around the 50 day MA (1.3052). Near-term resistance is expected at the 200 day MA (1.3224) and a pair of consecutive monthly doji’s for August and September hint to considerable congestion around 1.31”.