USD/CAD keeps the bullish stance near term – Scotiabank

FX Strategists at Scotiabank keep seeing near term resistance in spot around 1.3280.

Key Quotes

"The currency remains vulnerable in an environment of risk aversion and broad-based USD strength. Oil prices remain weak with Brent and WTI testing fresh multi-month lows as Western Canada Select consolidates under $20/bbl. Bank of Canada rate expectations have softened and OIS are pricing only 5bpts of tightening for December and just less than one full 25bpt hike by January. The CAD’s correlations are also generally weak at the moment, suggesting that market participants are struggling to find a narrative for the currency. Measures of implied CAD volatility are rising from relatively low levels and the cost of protection against CAD weakness remains relatively cheap. Speculative (CFTC) CAD positioning is also light and close to neutral".

“Momentum indicators are bullish and the RSI has not yet reached the overbought threshold at 70. DMI’s are confirming with a bullish alignment and the ADX trend strength indicator is recovering from last week’s multi-year low. We continue to highlight the importance of the ascending trend channel from early October, implying support around 1.3120 and resistance in the lower 1.33s. We would anticipate near-term resistance closer to 1.3280”.