MUFG Research discusses USD/CAD outlook and sees a scope for a move back in the middle of 1.2000-1.12500
"The Canadian dollar continues to trade on the back foot in the near-term with USD/CAD just above the 1.2500-level. The Canadian dollar weakened modestly after yesterday’s latest BoC policy meeting. The BoC policy meeting was largely in line with expectations but there appears to have been some disappointment that the BoC did not strike an even more hawkish tone," MUFG notes.
"Taking yield spreads and the current price of oil into account, our short-term model estimate signals that USD/CAD would be better valued trading in the middle of a 1.2000 to 1.2500 range. The scaling back of elevated CAD longs could be leading to weakness overshooting in the near-term," MUFG adds.