USD/CAD appears bullish near term – Scotiabank

FX Strategists at Scotiabank stay bullish on the pair, seeing resistance ahead of the 1.3220 region in the near term.

Key Quotes

“Sentiment is dominating as market participants consider ongoing trade policy uncertainty, domestic pipeline developments and notable FX weakness across most EM currencies. Domestic rate expectations have softened and OIS are pricing no risk of a hike for tomorrow’s BoC policy decision with roughly 20bpts of tightening for October. Yield spreads have widened considerably and measures of implied CAD volatility are rising. Headline risk is elevated and NAFTA negotiations are set to resume on Wednesday”.

“Momentum indicators are bullish and the DMI’s are confirming. USDCAD has broken through the descending trend line drawn from the June-July-August highs and USDCAD is now threatening near-term resistance around 1.3180. Additional resistance appears limited ahead of 1.3220 and support is expected between 1.3100 and 1.3080”.

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