BTMU FX Strategy Research notes that CAD has been the best performing currency overnight driven by a signal from the Bank of Canada that it is moving closer to raising interest rates.
“USD/CAD has broken below key support from its 200-day moving at around the 1.3335-level which has reinforced bullish momentum for the Canadian dollar in the near-term,” BTMU adds.
“The developments support our bullish outlook for the Canadian dollar which in part was built on the assumption that the BoC would begin to raise rates in the first half of next year.
If expectations for policy divergence between the BoC and Fed become less acute, USD/CAD should move closer into line with levels justified by the price of crude oil which we estimate is currently between 1.2500 and 1.3000,” BTMU argues.
Source: BTMU Research
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