USD/CAD remains bullish near term – Scotiabank

FX Strategists at Scotiabank have reiterated the bullish outlook on the pair in the short term.

Key Quotes

“A combination of softer crude oil prices and more USD-supportive interest rate spreads leaves spot USDCAD looking a little undervalued relative to our modeled equilibrium rate today. We see directional risks geared to the upside in funds near-term as a result. Recall also that seasonal factors are USD-supportive broadly in H2”.

“USDCAD traded positively last week overall and Friday’s session closed bullishly for funds. The rebound in the USD has taken spot to the 40-day MA precisely today (1.3016) where near-term gains may stall”.

“Given the USD’s disappointing performance earlier in the month, USDCAD still has its work cut out to trade decisively higher (above 1.3250) from a longer-term point of view but short-term patterns are supportive and we think a clear move through the low 1.30 area should facilitate a return to the 1.32+ area. We see support now clustered in the low/mid 1.29 area”.