USD/CAD technicals point to a neutral stance – Scotiabank
Eric Theoret, FX Strategist at Scotiabank, noted the near term outlook on the pair remains neutral.
“Tuesday’s domestic risk lies with the release of the Bank of Canada’s Financial System Review (10:30am ET). The report is not typically market-moving however its release will be accompanied by a press conference (11:30am ET) with Gov. Poloz and SDG Wilkins. The outlook for relative central bank policy remains a headwind for CAD, as the 2Y U.S.-Canada yield spread extends to fresh multi-month highs. Oil prices appear vulnerable heading into this week’s OPEC meeting, and CAD is trading above fair value estimated using spreads and both oil prices and broader-CAD relevant commodities. CFTC speculative positioning data show a continued paring of risk in both gross long and gross short positions, suggesting considerable uncertainty with regards to the near-term path for CAD”.
“USDCAD has returned to the midpoint of its one month range. Momentum signals are neutral and trend strength is weak Near-term support is expected between 1.2750 and 1.2720, and the (broken) ascending trend line drawn from the September lows offers resistance above 1.2820”.