TD as the Canadian dollar gets beaten up by the fall in oil
TD Research argues that CAD risks to oil prices are asymmetric around current levels.
"That means, we see more downside than upside, owing to the higher breakeven levels in Canada's oil sands region," TD adds.
Adding to that, TD believes that a further pullback in the Trump trade does leave CAD exposed, especially if oil makes a convincing downside break of the 200dma.
"With oil below $50bbl and the US/CA 2y spread at 50bp, the implied level for USDCAD is1.37. Ahead of the FOMC, 1.3420 likely to be a key pivot," TD argues.
USD/CAD is trading circa 1.3492 as of writing.
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