USDCAD breached channel support at....>

DOLLAR-CANADA: USDCAD breached channel support at C$1.3487 on Friday as

highlighted in our analysis email (USDCAD Breaks Channel Base Support -

0901GMT). A combination of firmer oil prices and a broadly weaker dollar has

seen CAD further strengthen to C$1.3356. The 50-dma provides next support at

C$1.3334, a break opens the Dec 12 low & 55-dma at C$1.3323/12, ahead of a run

at the 100-dma & Dec 3 low at C$1.3175/60. CAD has now registered gains of over

2% against the dollar and is the clear outperformer in G10 this year. Morgan

Stanley have recommended selling USD/CAD this morning, with a target of C$1.2800

and a stop at C$1.3650. Canadian spotlight this week falls on the BoC policy

rate decision due Wednesday, with >80% chance of no change priced in by BBG's

WIRP (marginal pricing is for a cut in light of the recent global economic

slowdown worry & speculation surrounding the Fed's monetary policy path), and

only one of those surveyed looking for a hike from the BoC, while the remainder

look for no change. The meeting will include the Bank's quarterly economic

forecasts and a press conference. Elsewhere, Canadian housing starts data is

also due Wednesday, while building permits figures come out Thursday.