USDCAD’s better risk sentiment and continued strength in crude oil prices (WTI above $62/bbl and WCS trading near $55, the highest level since last July) are combining to pressure the USD back to the 1.33 area. US-Canada spread narrowing has steadied, however, which may limit the CAD’s ability to extend beyond 1.33 for now, especially as the spot has run a little ahead of our FV estimate, which closed out yesterday at 1.3370 levels.
The domestic data calendar is thin ahead of Friday’s jobs numbers so funds will likely remain a slave to external factors and technical drivers in the short run.
We remain constructive on the CAD but we would rather fade minor USD rebounds than chase the market lower from here at this stage.
CAD trading defensively as post-Fed spread narrowing begins to fade. We maintain our medium-term bearish CAD view, expressed as a one-touch calendar call spread.
We have positions open in -3m/+7m OT USDCAD calendar call spread (k=1.40). Paid 16.6% in mid-January. Marked over 20% so far. Courtesy: Scotiabank
Currency Strength Index: FxWirePro's hourly CAD is at 7 (neutral), the hourly USD spot index is inching towards 106 levels (highly bullish) while articulating at 13:52 GMT.
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex


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