USD/CAD: Likely to trade in new range between 1.30/1.35 - TDS

Analysts from TDS expect the USD/CAD pair to continue to move to the upside, with an immediate target at 1.33 followed by 1.35 during the second semester.

Key Quotes:

“In the wake of the market repricing of Fed risks and softer tier one data in Canada, USD/CAD has rallied nearly 4% since the start of May. We look for USD/CAD to remain North of the 1.30 level throughout H2.”

“We identify a few key drivers of the latest USD/CAD move and dust off our short-term toolkit to measure the outlook for USD/CAD over the coming months.”

“We suspect USD/CAD has already seen the lows for this year so believe it will continue to trade north of 1.30, realigning with the old 1.30 –1.35 range rather than the recent 1.25 –1.30 over the rest of the year.”

“Our high-frequency model suggests interest rate differentials and relative monetary policy remain the key support for USD/CAD into the summer months, especially if CAD data surprises continue to slip.”

“Oil prices, risk appetite and market positioning will also be crucial for the price action, and we think these factors also support a gradual rise in USD/CAD from current levels. Our immediate target for the single currency is 1.33 followed by a move to 1.35 in H2.”