USD/CAD: where to from here? - Scotiabank

Analysts at Scotiabank explained that CAD is up from Friday’s close, a mid-performer among the G10 in an environment of broad-based USD weakness.

Key Quotes:

"Headline risk is elevated in the context of the U.S. government shutdown and NAFTA negotiations scheduled through Jan 29. In terms of domestic risk, we highlight the importance of Thursday’s retail sales and Friday’s CPI data."

"Monday’s release of second-tier wholesale trade figures is unlikely to be market-moving. We remain cautious on the near-term outlook for CAD. The 2Y U.S.-Canada yield spread is drifting higher and USDCAD is trading well below levels (1.2800-1.2900) implied by our fair value estimates using spreads, oil prices, and a broader index of CAD-relevant commodities."