Credit Agricole CIB Research discusses CAD outlook and sees a scope for an extension in USD/CAD recent rebound on the widening of the USD-CAD short-term rate differentials.
"The CAD outlook has continued to deteriorate recently, in an interesting turn of events for hitherto one of the preeminent carry investment currencies in the G10 space. Indeed, it seems that the latest rebound n USD/CAD correlates well with the latest widening of the USD-CAD short-term rate differentials. It further seems that resilient oil prices have not been that supportive for the CAD, suggesting that the market focus remains on the currency’s loss of rate advantage at the moment," CACIB notes.
"Next week, FX markets could focus on the release of Canadian retail sales for May," CACIB adds.