TD Research notes that after the big downward lurch in April, USD/CAD continues to bounce around in a modest range.
“The price action is consistent in vol markets where USDCAD 1m and 3m vols are within striking distance of the cyclical lows. This partly reflects the state of the business cycle and generally subdued level of macro vol,” TD adds.
“Even so, we still think the next big move in USDCAD is lower towards our call of 1.32 rather than a retest of the recent highs. For one thing, USDCAD has now plugged the valuation gap in our HFFV, offering it some room to reprice the prospects of a pickup in macro fundamentals,” TD projects.
In lime with this view, TD maintains a short USD/CAD* position from 1.3700 targeting 1.3200.
USD/CAD is trading 1.3480 as of writing.
Source: TD Securities Research
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