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- USD/CAD: The risk of further gains towards the 1.38 area is hard to exclude – Scotiabank
USD/CAD: The risk of further gains towards the 1.38 area is hard to exclude – Scotiabank
The CAD’s slump over the past few days is its worst three-day run since last November. Economists at USD/CAD analyze USD/CAD outlook.
Bullish momentum reinvigorated
Canadian data prints this week need to reflect some resiliency in Canadian growth to help steady the exchange rate; markets are pricing in marginally more risk of another BoC rate hike before year-end (14 bps) relative to the Fed and have 18 bps of tightening factored in by January. If those odds weaken, the CAD may ease further still – despite already looking cheap.
With little or no obvious technical sign that the USD rise is peaking on the short-term chart, the risk of further USD gains towards the 1.38 area is hard to exclude; the snap higher in the USD has reinvigorated bullish momentum on the shorter-term studies which will have the effect of limited short-term USD corrections – likely to the mid/upper 1.36 area.
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