I’m getting the feeling that the market is severely one-sided in USD/CAD in longs.
The pair touched a 3-month high yesterday at 1.0986 but quickly turned around after the best Canadian trade balance report in 2.5 years. The pillars for the Bank of Canada to raise rates are pickups in investment and exports. Some signs of investment have begun to appear and the trade report showed better exports but expectations for the BOC to enact any kind of monetary policy are extremely low for the next year (at least).
Instead, flows are driving the latest moves and some of the broad US dollar strength is retracing after 2-3 weeks of relentless dollar buying.
I see USD/CAD retracing to the 1.0800/50 level before any push higher.
Will USD/CAD touch 1.0850 or 1.1000 first?
1.0850
1.1000
Last at 1.0920.
