USD/CAD: Recent run up may be complete - Westpac

According to Richard Franulovich, Research Analyst at Westpac, a key reversal into the 1.30 level suggests the recent run up may be complete for USD/CAD pair.

Key Quotes

“USD/CAD also looking very extended versus the ongoing surge in energy prices, the latest leg up in crude oil through USD70/bbl suggesting USD/CAD “should” be trading sub-1.25.”

“BoC pricing may constrain USD/CAD from steeper losses near term though, market pricing for a hike at their July 11 meeting at 88% and another second +25bp hike fully priced by year’s end. That is about as much as one could expect for a central bank with a lukewarm tightening bias that has been wary about elevated household leverage and NAFTA risks.”

“CAD can continue to outperform on cross, aided by higher energy prices and relatively firm BoC rate pricing, but USD/CAD will remain at the mercy of a still firm USD.”