USD/CAD: We continue to look to fade any breaks of 1.34 for now - TD Securities
"A plethora of Canadian data and G10 central bank decisions will keep things interesting into the holidays," note TD Securities analysts.
"The domestic data flow kicks off with existing home sales on Monday, which will be followed through the week with manufacturing sales, CPI, retail sales, GDP and the Bank of Canada's Business Outlook Survey (BOS). External event risk will be provided by Wednesday's FOMC decision but we also have the BoE on Thursday before US government shutdown risks resurface into the weekend."
"A busy policy and data calendar offers plenty of risk events for the majors. Still, with risk budgets likely capped ahead of the New Year, liquidity, positioning and valuation could be the major drivers into year-end. For the loonie, we don't think the local data will do it many favors, especially as it is trading mostly where it should against cyclical drivers."
"While poor data would not offer solid reasons to get short USDCAD, we do think that the market is now too dovish on the BoC next year. By implication, this backdrop argues that the 2y spread has run a touch too high, suggesting a peak in that key indicator. As a result, we continue to look to fade (not follow) any breaks of 1.34 for now."