USD/CAD to plunge to the 1.22 level sooner than expected – Scotiabank

The CAD has made marginal progress to probe the mid-1.23 zone. Economists at Scotiabank expect the USD/CAD pair to slump to the 1.22 mark in the next few weeks.

Potential congestion in the 1.2275/1.2325 range

“We continue to forecast 1.22 for year-end but feel the USD/CAD risks hitting that point in the next few weeks before perhaps rebounding somewhat in December.”

“The pro-risk mood is CAD supportive alongside high energy prices. Note, however, that the 2Y spread, while still CAD-supportive, did narrow some 5bps yesterday. That may impede the CAD’s progress somewhat.” 

“There is little, obvious support for the USD until the low 1.22s (76.4% Fibonacci support at 1.2229) but we can see some potential congestion in the 1.2275/1.2325 range that may slow USD losses.”

“Resistance is 1.2340/45 and 1.25.”