USD/CAD to turn lower as it approaches strong resistance – Standard Chartered

Broad USD strength will likely fade soon. Economists at Standard Chartered are bullish on both the CAD over a 12-month horizon and believe current corrective weakness offers attractive investment entry points over the short and medium-term.

Incoming data show recovery is gaining momentum

“The Canadian economy has rebounded quickly. Growth and employment data are strong. Canada has buoyant housing markets, favourable trade positions and a central bank that has already begun the path to monetary policy normalisation. We expect the latter to be reinforced by both the Bank of Canada tomorrow.”

“Canada has benefited from higher oil prices and strong US growth. Furthermore, Canada is now among the world leaders in vaccination rates.”

“USD/CAD should encounter a band of strong resistance between 1.2550 and 1.2700, which can provide an attractive entry level for an eventual decline below 1.2250 towards 1.2000.”