USDCAD: 1.32-1.34 remains the key range - Rabobank

Christian Lawrence, Senior Market Strategist at Rabobank, suggests that 1.32-1.34 remains the key range they expect to see price action in over the coming weeks.

Key Quotes

“As it stands, USD/CAD may test 1.30 but we expect price action to fail there and for the pair to push back above 1.32. Further out, in the coming months we still see USD/CAD as likely to break above 1.35.”

“Positioning and options: Recent CFTC data show CAD net shorts were reduced slightly and remain relatively close to neutral, albeit still in net short territory. A look at DTCC data shows that the balance of USD/CAD calls vs. puts traded this year stands at 51.12% vs. 48.88%. A look at upcoming option expiries shows a total of USD 2.69bn from 31 positions set to expire on 27th January. In terms of risk reversals, USD/CAD 3mth 25 delta risk reversal is little changed relative to the start of the year but it is worth noting that the 6mth has fallen from 1.30 to 1.22 and the 1yr has dropped around 0.12 to 1.36.”