USD/CAD is redefining recent range resistance at 1.3600 - Westpac

Tim Riddell, Research Analyst at Westpac, suggests that a triumvirate of a Trump dairy war, tariffs on lumber and softening oil prices has seen CAD slide over the past two weeks and has coincided with a sharp swing to a net short position from non-commercial accounts.

Key Quotes

“Renegotiating NAFTA could also undermine the still vulnerable nonresource sector, the sector that seems to be of most concern to the BoC.”

“Against these negative factors, a resurrection of Trump’s other domestic growth and tax proposals could support CAD as could a shift in discussions in front of key OPEC negotiations in Vienna on 25th May. Given the shift in positioning to a large net short, any such positive results could see CAD squeeze, despite it currently remaining vulnerable, especially to Trump’s NAFTA stance.”

“USD/CAD is redefining recent range resistance at 1.3600 and could extend towards 1.3850 before retracing back to the upper end of its recent range.”