The pair is expected to meet contention in the 1.2500/1.2450 in the short term horizon, noted FX Strategists at Scotiabank.
“Elevated commodity prices are providing CAD support, dominating as a nearterm driver and delivering an important offset to bearish, extended interest rate differentials. This week’s domestic calendar is relatively busy, with all eyes on Wednesday’s Bank of Canada policy decision (widely expected hold) and MPR forecast update ahead of Friday’s retail sales and CPI data. We anticipate a constructive tone from the Bank of Canada, acknowledging improvement on the NAFTA front and last week’s BOS results. Speculative (CFTC) CAD positioning is modestly bearish and risk reversals are showing a relatively low premium for protection against CAD weakness. We remain bullish CAD looking to medium-term strength through the spring/summer period”.
“USDCAD is consolidating within a relatively tight four session range roughly bound between the mid-1.25s and the 200 day MA (1.2625)”.
“We look to a bearish resolution and highlight the absence of near-term support ahead of 1.2500. Additional support is expected at 1.2450”.