USD/CAD bearish/neutral near term – Scotiabank

Eric Theoret, FX Strategist at Scotiabank, noted the pair’s outlook remains on the bearish/neutral side for the time being.

Key Quotes

“The outlook for relative central bank policy appears set to remain dominant as market participants assess the Fed’s H2 2017 policy path, with markets pricing a sub-50% chance of another hike by December. For Canada, an October hike is almost fully (23bpts) priced. We have turned slightly more cautious on the near-term outlook for CAD following the impressive 10% rally from early May and feel that the scope for additional gains may be limited without significant new incentives”.

“Trend and momentum indicators are overwhelmingly bearish however the latter are oversold and suggestive of potential exhaustion”.

“USDCAD has almost fully retraced its rally off the 2016 low at 1.2461. There are no major support levels ahead of the lower 1.23 and lower 1.22 area. Near-term resistance is expected between 1.2550 and 1.2600”.