CAD: Medium-term target is near 1.35 - BBH

Research Team at BBH, notes that after testing the CAD1.30 level on October 19, the US dollar rallied 2.7% to new seven-month highs near CAD1.3350. 

Key Quotes

“Although the Bank of Canada statement, following the policy meeting, tweaked the risk assessment to balanced from the asymmetrical downside bias previously, Governor Poloz admission that easing was discussed put the Loonie on the defensive.  Disappointing retail sales and slightly softer than expected headline inflation ahead of the weekend, pushed on an open door.  

The technical condition largely favors further US dollar gains.  Our medium-term target is near CAD1.35, but in the bigger picture, a move back into the CAD1.38-CAD1.40 area seems reasonable.  A near-term note of caution comes from the pace of the US dollar's rise.  It is edging through the top Bollinger Band (~CAD1.3320).”