USD/CAD neutral near term – Scotiabank

Eric Theoret, FX Strategist at Scotiabank, sees the pair should find some contention in the 1.2480/50 area.

Key Quotes

“CAD has returned to the mid-point of its October range with an impressive recovery from Tuesday’s low on the back of an extension of NAFTA negotiations (March 2018 from December). The near-term balance of risk still favors CAD weakness as we note the ongoing shift in the outlook for relative central bank policy. Bank of Canada rate hike expectations continue to fade and the probability of a December Fed hike has climbed to a fresh high. The 2Y U.S.-Canada yield spread is rising in a CAD-negative manner and climbing to its highest level since late August”.

“Trend and momentum indicators are modestly bullish however USDCAD remains range bound. We look to support between 1.2480 and 1.2450. Resistance is expected above 1.2550”.