USD/CAD outlook shifted to neutral – Scotiabank

Eric Theoret, FX Strategist at Scotiabank, noted the neutral stance on the pair in the near term.

Key Quotes

“There are no domestic releases scheduled for Tuesday’s NA session, leaving the near-term focus squarely centered on broader developments ahead of Wednesday’s Bank of Canada policy decision”.

“A hold (at 0.50%) is broadly anticipated, and OIS are pricing no meaningful risk of a policy change over the next 12 months. Measures of implied CAD volatility are relatively steady, and risk reversals suggest a stabilization in the premium for protection against CAD weakness”.

“Momentum signals are close to neutral and the ADX is in trendless (sub-25) territory at 16”.

“USDCAD has tumbled back below both its short and medium-term MA’s with a break under 1.29. We look to support around 1.2850 and note the absence of resistance ahead of 1.2980”.