TD Research discusses USD/CAD tactical outlook and flags a scope for a move lower towards its high-frequency fair-value model 'HFFV' around 1.3150-1.3200 over the coming day.
"At this time, we think USDCAD could buck USD pressure as we find the pair not really trading in line with the typical drivers. This suggests to us that the latest run-up has been driven with an obsession that Poloz could signal a September cut (which is not priced) this weekend. These hopes have been dashed however with the BOC confirming no media plans at Jackson Hole," TD notes.
"We remind markets here that Poloz has said in the past that August is typically for vacation. In any event, a non-committal Powell means even more reluctance from Poloz. As a result, we think USDCAD will correct tactically lower in the coming days towards our HFFV near 1.3150/1.3200 as a realignment to front-end curve," TD adds.