USD/CAD set to test 2021 highs at 1.2949 – Credit Suisse
01.12.2021, 07:45

USD/CAD set to test 2021 highs at 1.2949 – Credit Suisse

Economists at Credit Suisse turn neutral on the Canadian dollar, as oil price weakness and the pending BoC strategy review bias near-term USD/CAD risks higher to 2021 highs around 1.2949, with dips in the pair to 1.2530 likely to find support.

Bank of Canada strategy review uncertainty adds to covid risk

“We suspect that barring a clear scientific consensus pointing to a limited impact from the Omicron variant, this uncertainty will likely curtail investor willingness to ‘buy the dip’ in CAD ahead of the BoC rate decision, especially with front-end implied CAD vols still within recent ranges, far from signalling high levels of investor concern.”

“There is currently no indication that the upcoming BoC meeting will feature any news on the mandate review, but overall it remains a risk that BoC observers are keenly aware of, and we suspect will add to reasons for investors to be cautious around CAD in the very near-term.”

“We see USD/CAD re-testing 2021 highs at 1.2949 if Omicron related fears prove persistent, and think that dips in the opposite direction are likely to find support around 1.2530 (near the 50-DMA on daily and weekly charts alike) at least until more clarity around the BoC’s mandate review is available.”

 

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