USD/CAD stays neutral near term – Scotiabank

FX Strategists at Scotiabank remain neutral on the pair and add that support emerges below 1.2920.

Key Quotes

“NAFTA trade concerns are dominating and pressuring both CAD and MXN as market participants consider comments from Senate Majority Whip Cornyn confirming the passing of the congressional deadline for competing a deal in 2018. Weakness in benchmark oil prices is being offset by Monday’s record rebound in the price of Western Canada Select and domestic rate expectations are steady with OIS pricing in just under 20bpts of tightening for July and two cumulative 25bpt hikes by December. Our fair value estimate for USDCAD is currently just above 1.2700”.

“USDCAD continues to consolidate within last week’s wide range roughly bound between 1.2820 and 1.3050. Momentum indicators are neutral and trend strength is muted. The 1.2980 resistance level is being threatened and additional resistance appears limited ahead of 1.3020. Recent support has been observed below 1.2920”.