USD/CAD favouring the downside – Scotiabank

FXStreet (Barcelona) - Camilla Sutton CFA, CMT, Chief FX Strategist at Scotiabank, notes USD/CAD technicals favour the downside, with pair expected to test the downside of its 1.2314-1.2799 range.

Key Quotes

“CAD is soft leading into the release of CPI, expected to show headline decline to 0.8%y/y and core at 2.1%y/y. This is an important release for judging the BoC policy decision next week.”

“Currently markets are pricing in only a 34% chance of a rate cut next week with a full cut priced in later in the year. Any surprise in inflation today will substantially shift these probabilities and impact CAD.”

“USDCAD short‐term technicals: mixed but favouring downside risk, with both the MACD and moving averages warning of a break lower.”

“For the last month USDCAD has traded in a 1.2314 to 1.2799 range and is currently shifting towards a test of the downside. However today’s failure to maintain itself below 1.2400 leaves the currency firmly within its range and it will now be the pattern into week’s end that is important for judging near‐term direction.”