USD/CAD pullback an opportunity to buy
USD/CAD is down 125 pips to 1.3061 today despite a 95-cent drop in oil prices. That's the way it goes at month end.
Canadian oil firms often settle around the 25th of the month but there might be more CAD buying than usual because that was Good Friday and it's been holidays in Canada since.
Westpac recommends buying this latest dip if it extends down to 1.2840 with a stop at 1.2710. They see potential upside to 1.34/35.
"Our model, macro and technical signals escort us into buying USD/CAD on weakness. Catalysts for fresh meaningful downside in USD/CAD are running out - crude oil seems to have found a ceiling around $40/bbl while PM Trudeau's pro-growth budget is now priced-in and out of the way. Upside USD/CAD targets should be modest though (1.34/1.35) - hard landing tail risk on China should remain dormant a while longer as policymakers there adopt a more pro-growth stance and if Chair Yellen is to be taken at face value the Fed could be sidelined past June amid soft Q1 data ex the PMIs," They write.
