The CAD made gains against the USD last week. Scotiabank economists analyze the outlook for the USD/CAD.
CAD Shorts Piling Up Again
The recent USD appreciation appears to have run out of gas again in the 1.36/1.37 range, perhaps not unlike the spring. Historically, USD/CAD forays above 1.35 tend to be limited in terms of scope and duration.
CAD gains – so far – are limited and there is enough risk of events ahead to keep markets cautious about the prospects of the CAD rally extending. But it is still somewhat undervalued and perhaps oversold on the charts.
CFTC data on Friday reflected a new build-up of net short positions in the CAD, just as the CAD is showing timid signs of stabilization, again similar to the March/April period. A push below 1.35 could put some pressure on some of the most recent CAD short positions.
Source: Fx Street
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