USD/CAD keeps the cautious/bearish view – Scotiabank

FX Strategist at Scotiabank Eric Theoret noted the pair’s stance remains bearish although with some caution in the near term.

Key Quotes

“CAD remains well supported by both its drivers as WTI tests fresh highs above $47.17/bbl while the 2Y U.S.-Canada spread narrows in response to the softening in Fed expectations following Wednesday’s minutes release. However, measures of implied CAD volatility are showing signs of a broader turn and risk reversals hint to an exhaustion of the postBrexit moderation in the premium for protection against downside risk”.

“USDCAD has made a renewed attempt at Tuesday’s low around 1.2800, threatening a break to fresh lows at levels last seen in late June. Near-term support is expected at the June 24 open near 1.2750 followed by the June 23 low around 1.2680. Signals are broadly bearish across both trend and momentum indicators, and the RSI’s 36 level leaves ample room for further downside before reaching the oversold threshold at 30”.