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USDCAD Sees Step Closer To Key Support Vs Backdrop Of Historically Stretched Net Shorts

CANADA
  • USDCAD has fallen further below the week’s initially narrow range to a low of 1.3608, aided by further gains for US equity futures and WTI more than reversing early losses.
  • The pair has now almost fully reversed the shift higher on Friday’s dovish US and Canadian jobs reports, where the Canadian report showed a faster continued climb in the unemployment rate (from 6.24% to 6.42%, with a Sahm rule calculation at 1.0 vs the 0.4 in the US).
  • The bear threat is still present with a key support at 1.3590 (May 16 low).
  • Tomorrow sees US CPI firmly in focus, and with relatively light option expiry for the subsequent NY cut leaving little near-term directional bias (most notable higher with $541m at 1.3650).
  • Beyond that, local focus shifts to early next week with the BoC’s quarterly surveys (Mon) and CPI (Tue) for the last major inputs before the BoC meeting on Jul 24.
  • BoC-dated OIS has shifted to 16-17bp of cuts for the meeting vs 12bp pre-jobs, in what could be a back-to-back cut.
  • Latest CFTC positioning data for last week showed a yet further build in CAD net shorts, now at 46% of open interest. It approaches the 49% of May 2017 for otherwise the largest net shorts since 2007.

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  • USDCAD has fallen further below the week’s initially narrow range to a low of 1.3608, aided by further gains for US equity futures and WTI more than reversing early losses.
  • The pair has now almost fully reversed the shift higher on Friday’s dovish US and Canadian jobs reports, where the Canadian report showed a faster continued climb in the unemployment rate (from 6.24% to 6.42%, with a Sahm rule calculation at 1.0 vs the 0.4 in the US).
  • The bear threat is still present with a key support at 1.3590 (May 16 low).
  • Tomorrow sees US CPI firmly in focus, and with relatively light option expiry for the subsequent NY cut leaving little near-term directional bias (most notable higher with $541m at 1.3650).
  • Beyond that, local focus shifts to early next week with the BoC’s quarterly surveys (Mon) and CPI (Tue) for the last major inputs before the BoC meeting on Jul 24.
  • BoC-dated OIS has shifted to 16-17bp of cuts for the meeting vs 12bp pre-jobs, in what could be a back-to-back cut.
  • Latest CFTC positioning data for last week showed a yet further build in CAD net shorts, now at 46% of open interest. It approaches the 49% of May 2017 for otherwise the largest net shorts since 2007.