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USD/CAD: Correction higher to face resistance at 1.2460 – DBS Bank

FXStreet reports that Benjamin Wong, Strategist at DBS bank, discusses USD/CAD prospects.

“Eventually, all would boil down to fundamentals, if we adjudge Bank of Canada Governor Tiff Macklem’s comments uttered last Thursday. While Macklem argued recent CAD appreciation reflected in part higher commodity gains, he was quick to point out continued gains would jeopardise the BoC’s most recent forecasts which assumed a 1.25 rate. In any case, any sustained USD rally still looks miles away with the key 40-week moving averages at 1.2802. Until such levels are crossed, the inherent big picture trend stays CAD friendly.”

“The Overnight Indexed Swap (OIS) market currently anticipates that the BoC would stage three 25 bps rate hikes over the next two years – this keeps the CAD 2Y government bond yield over its US equivalent ratio stepping higher..”

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