USD/CAD: Trapped in a moderate uptrend - Westpac

USD/CAD is trapped in a moderate uptrend amid a more cautious sounding BoC and wobbles in risk sentiment but suspect 1.3000 likely to offer stiff resistance just as it did in late Oct, according to Richard Franulovich, Research Analyst at Westpac.

Key Quotes

“For one, recent weak data is arguably payback for exceptionally strong data in Q2 and into Q3.”

“After a solid 3% growth rate in 2017 the BoC (and consensus) forecast a more moderate 2.1% in 2018. The BoC and consensus may be too cautious. PM Trudeau’s 2016 fiscal stimulus is still washing through the economy, US growth prospects are firm, oil prices are at 2 ½ year highs and local financial conditions remain broadly supportive for continued decent growth. +40bp in BoC hikes are priced in through to July 2018 but if the above growth scenario pans out the BoC could easily match that.”