USD/CAD aims to further gains – Scotiabank

FX Strategist Eric Theoret has reiterated the neutral/bullish view on the pair, expecting further upside in the short term.

Key Quotes

“We have maintained a bullish USDCAD (bearish CAD) bias on the basis of relative central bank policy, and highlight the headline risk posed by Fed Chair Yellen’s public appearance at 1:15pm ET”.

“We note the slight CAD supportive narrowing in the 2Y U.S.-Canada yield spread, however we maintain expectations of a continued widening over the medium-term as we look to Fed-BoC divergence”.

“USDCAD has bounced off recent support around the 50 day MA and the 38.2% Fibo retracement level of the May 3-24 rally (bottom chart). We note Thursday’s attempt at the formation of a bullish hammer on the daily chart and the more decisive completion of a bullish outside reversal on the 6-hour chart. We remain bullish above 1.2900, with risk of accelerated gains on a sustained break back above the 9 day MA (1.3050)”.