CAD looks rich at these levels - Rabobank

Christian Lawrence, Senior Market Strategist at Rabobank, notes that the Bank of Canada left rates on hold at 0.50% last week while highlighting a dovish bias as the USD/CAD rallied 1.7% on the day of the decision and tested 1.3388 by the end of the week but subsequent price action saw USD/CAD break back down below 1.32 back.

Key Quotes

“We expect little near term impact from the Keystone XL development. USD/CAD remains a tactical market and technicals are key despite a lack of momentum.”

“We remain of the view that CAD looks rich at these levels and we favour a move back up to 1.35 in the coming months. As such, we favour entering into longs when USD/CAD is trading 1.30-1.32 and it would take a move into the 1.20s to question our call.”