USD/CAD short-term hurdle aligns at 1.2780/1.2820 – Scotiabank

FX Strategist at Scotiabank Eric Theoret noted the pair’s stance remains on the neutral side for the time being, while initial resistance is expected in the 1.2780/1.2820 band.

Key Quotes

“Yield spreads remain somewhat bearish for CAD, with the 2Y U.S.-Canada testing fresh four month highs. Oil prices appear to be retracing Tuesday’s decline and are providing a modest offset. NAFTA headline risk is set to remain elevated into the weekend and early next week. Risk reversals suggest a continued erosion in the premium for protection against CAD weakness”.

“USDCAD has yet to break out of its range from late October. Momentum is muted and trend strength is weak. We continue to highlight the importance of near-term resistance between 1.2780 and 1.2820 with support at 1.2720 and nothing major ahead of 1.2620”.