CAD: Lower levels still seem to beckon into year’s end - Westpac

Research Team at Westpac, notes that the USD/CAD is entering its third month of consolidation circa 1.2650-1.32, but lower levels still seem to beckon into year’s end.

Key Quotes

“A much improved domestic growth story will be key – as activity bounces back from the Fort McMurray wildfire disruptions and as the Trudeau fiscal stimulus kicks into gear in Q4. oil prices have stalled but they still suggest we may be past the low point for the collapse in mining investment too. U

SD/CAD more likely to test 1.25 than 1.35 in summer, though the cleaner and more rewarding trade may well be to buy CAD vs the European currencies, even though that will be a consensus favourite. The Nov US Presidential election is the major risk for CAD bulls to watch, USD/CAD (and USD/MXN) likely favourite hedges if polls tighten given Trump’s anti-NAFTA/immigration stance.

Technical: In the middle of the 1.2660-1.3120 range seen recently. Sideways in the week ahead.”