USD/CAD neutral short term – Scotiabank

Eric Theoret, FX Strategist at Scotiabank, remains neutral on the pair, seeing support in the 1.2250/80 band.

Key Quotes

“CAD is consolidating at the lower end of its September range and near-term domestic risk is limited ahead of Wednesday’s speech and press conference from BoC Gov. Poloz and Friday’s monthly GDP data for July”.

“CAD correlations appear to have shifted, with WTI now dominating relative to the outlook for relative central bank policy. CAD positioning appears somewhat extended, with CFTC gross longs at their highest level since October 2012. The near-term balance of risk appears to favor CAD consolidation ahead of the high-level event risk later this week”.

“We await a break of the September 20 range roughly bound between 1.22 and 1.24 and note the near-term importance of the 21 day MA at 1.2272. Daily momentum signals are neutral, DMI’s are muted, and trend strength is weakening as the ADX softens toward 25. We look to considerable resistance above 1.24 and anticipate support between 1.2250 and 1.2280”.