USD/CAD points to further weakness near term – Scotiabank

According to FX Strategists at UOB Group, the pair keeps the bearish view unchanged in the short term horizon.

Key Quotes

“Domestic risk arrives with BoC Deputy Governor Schembri’s speech on ‘Canada’s approach to price stability’ (text 1:30pm ET, speech 1:45pm ET, Q&A). We look to a constructive tone and anticipate modest CAD strength. Bank of Canada rate expectations are recovering and OIS are pricing 16bpts of tightening for April and 40bpts by July. The broader tone is offering CAD support and risk reversals are showing a continued moderation in the premium for protection against CAD weakness”.

“The recent consolidation has been resolved with a break of 1.2550 support and extension to the mid/upper-1.24s. Bullish momentum signals have softened to neutral and are threatening a break into bearish territory. 100 day MA resistance ultimately held on a closing basis and near term support appears limited ahead of the 1.2420-1.2400 area. We look to near-term resistance above 1.2520”.