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CANADA: USDCAD Approaches Overbought With CAD A Clear Underperformer

CANADA
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  • USDCAD has seen another sharp push higher, hitting 1.3749 in an extension of yesterday’s clearance of the 1.37 handle.
  • CAD is a clear laggard in G10 FX today despite oil futures firming. It comes with a flatter USD after previously strong gains and a further decline in the 2Y Can-US differential for now a relatively low -80bps by recent standards. Odds of the BoC upsizing to a 50bp cut later this month are at recent highs with now 39bp priced.
  • Perhaps also weighing, TD Bank is set to pay $3bn in penalties in its US settlement according to the WSJ.
  • USDCAD currently tests 1.3745 (61.8% retrace of Aug 5 – Sep 25 bear leg) after which lies 1.3791 (Aug 7 high).
  • Adding weight to these resistance levels is the pair approaching overbought conditions as it continues what have been unusually large swings for the pair after overbought in late June and oversold in late August.
  • In the very near-term, sizeable option expiry is biased lower but doesn’t look to be having much impact for now, including 1.3725 ($758m), 1.3650 ($1.4bn) and 1.3595-1.3600 ($1.3bn). 
Source: Bloombe
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  • USDCAD has seen another sharp push higher, hitting 1.3749 in an extension of yesterday’s clearance of the 1.37 handle.
  • CAD is a clear laggard in G10 FX today despite oil futures firming. It comes with a flatter USD after previously strong gains and a further decline in the 2Y Can-US differential for now a relatively low -80bps by recent standards. Odds of the BoC upsizing to a 50bp cut later this month are at recent highs with now 39bp priced.
  • Perhaps also weighing, TD Bank is set to pay $3bn in penalties in its US settlement according to the WSJ.
  • USDCAD currently tests 1.3745 (61.8% retrace of Aug 5 – Sep 25 bear leg) after which lies 1.3791 (Aug 7 high).
  • Adding weight to these resistance levels is the pair approaching overbought conditions as it continues what have been unusually large swings for the pair after overbought in late June and oversold in late August.
  • In the very near-term, sizeable option expiry is biased lower but doesn’t look to be having much impact for now, including 1.3725 ($758m), 1.3650 ($1.4bn) and 1.3595-1.3600 ($1.3bn). 
Source: Bloombe