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USDCAD Drifts Closer To Key Support Ahead Of Jobs Reports

CANADA
  • USDCAD has drifted lower today to ~1.3610, helped by an intraday recovery in WTI.
  • It extends yesterday’s clearance of initial support on softer US data, but without the conviction today to test a key level at 1.3590 (May 15 low) on Independence Day.
  • Earlier today, a dovish PMI report with the softest input cost inflation since early 2021 had limited impact ahead of both US and Canadian jobs reports tomorrow.
  • Consensus looks for a further drift higher in the Canadian u/e rate in June but also another acceleration in Y/Y wage growth after the prior month’s surprise increase.
  • Option expiry for the NY cut is limited at nearby strikes.
  • Latest CFTC data show that, for futures at least, CAD net shorts built even further early last week despite the stronger than expected May CPI report. Net shorts at 44% of open interest (following two weeks at 42% after the BoC’s first cut of the cycle) are the largest since mid-2017 and before that 2013.

Source: Bloomberg

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