• USDCAD is heading towards the end of a volatile week 0.4% lower at circa 1.3400, with CAD slightly extending gains from already significant moves after a bumper employment report last Friday in contrast to a more mixed US payrolls report.
• That’s despite front end yield differentials more than reversing the more than 15bp narrowing in negative Can-US yield differential, ably offset by ESA rising 2.4% on the week as Fed hike expectations were cut back.
• The technical downtrend is seen intact, with initial support at today’s low of 1.3322 shortly below which sits 1.3317 (Nov 24/25 lows) and then the bear trigger 1.3226 (Nov 15 low). Alternatively, softer inflationary pressures or weaker risk sentiment could see a renewed move back towards the 50-day EMA at 1.3515.

Source: Bloomberg