Fundamentals and technical on the Canadian dollar, comment via Scotiabank from a mid-week note (Jan 3) and still pertinent
(bolding mine)
- Domestic rate expectations are firm and oil prices are providing added support
- Risk reversals are suggestive of a broad erosion in the premium for protection against CAD weakness and the near-term balance of risk appears to favor further CAD strength
- Note the absence of any major domestic releases ahead of Friday's trade and employment data
USDCAD short-term technicals:
- bearish-USDCAD has retraced roughly half of its September-December rally. Momentum is bearish, DMI's are confirming, and trend strength is rising.
- Recent support has been observed in the 1.2500-1.2520 area.
- Further support is expected at 1.2450 and we highlight the importance of the 61.8% retracement just under 1.2400.
- USDCAD's triple top implies a medium-term decline toward the lower 1.23 area.
