TD Research discusses CAD tactical outlook and notes that in the immediate future '(days not weeks)', valuation and positioning should guide the price action. TD is neutral on USD/CAD, while flags a scope for a move higher in AUD/CAD towards 0.9150.
"For starters, CAD's notoperating with much of a premium or discount, meaning that it trades in line with HFFV. That currently sits at 1.322, suggesting we have equal space to push up or down. But the boundaries limit moves to 1.3365 and 1.3070,"TD notes. Our positioning proxies imply that CAD positioning is close to neutral, though it looks stretched compared to the rest of G10," TD notes.
"The result suggests that there is some scope for CAD to weaken on some of the major crosses. Against HFFV, for instance, AUDCAD, holds at 2% discount, implying a short-term move towards 0.9150. For USDCAD, this backdrop means that the 1.30 level could be a sticky floor a little bit longer," TD adds.