USD/CAD bullish near term – Scotiabank

FX Strategist at Scotiabank Eric Theroret noted the pair’s stance remains on the bullish side in the short term.

Key Quotes

“Policymakers have maintained a decisively cautious tone, highlighting ongoing concerns about material excess capacity while reaffirming their expectations for continued policy divergence relative to a tightening Fed. We highlight the risk of an extension to the anticipated closing of the output gap, last seen (in the January MPR) occurring in mid-2018. OIS are still pricing roughly 5bpts of tightening over the next 12 months. We are bearish CAD”.

“Thursday’s daily hammer is bullish, composed of both a morning star (two hour chart) and outside reversal (six hour chart). Support has been ‘hammered’ in at 1.3280 and the balance of risk has once again shifted back to the upside. 1.3350 has been broken and we look to gains through 1.34 targeting the early March highs above 1.35”.