USD/CAD can continue to trade lower near term - Westpac

Richard Franulovich, Research Analyst at Westpac, suggests that with energy prices still very well supported and some residual July 27 Fed rate hike risk still to be priced out (8bp), USD/CAD can continue to trade lower near term.

Key Quotes

“As it is, USD/CAD has not kept pace with the rise in oil prices which more fairly value USD/CAD nearer 1.24/1.25.

The less adventurous may be tempted to sell AUD/CAD instead, the substantial outperformance in oil prices vis-à-vis iron ore prices raising risks of a break below 0.90 in this cross.”