USD/CAD downside below 1.25 unlikely – Westpac

According to Strategist at Westpac Richard Franulovich, further losses south of 1.25 appear unlikely.

Key Quotes

“USD/CAD momentum remains lower especially given the break of 1.2850, a critical technical threshold that should unlock further losses. Hard to see the pair trade materially south of 1.25 though”.

“Much depends on the Doha oil producers meeting where a lot of “good news” is discounted”.

“Gov Poloz sounded more cautious than one might have assumed given the Trudeau fiscal stimulus, indeed he noted absent the stimulus that the Bank would have had a rate cut bias”.

“CAD longs should find greater mileage owning the currency against the likes of AUD and NZD, rates markets more consistently leaning toward pricing in RBA and RBNZ rate cuts, and oil prices looking more likely to sustain gains than iron ore, the latter showing substantially less supply-side adjustment progress”.