Credit Agricole CIB Research retains a favorable stance on the CAD, and notes that risk sentiment remains in the driver’s seat for CAD.
"The CAD has been well supported of late with improving appetite for risk assets driving most of that development. Given a light data calendar this week, we expect the currency to remain driven by external factors such as global risk sentiment in general and commodity prices in particular," CACIB notes.
"However, it needs to be noted too, that the currency faces no more position squaring-related upside risks. After all, according to our data speculative positioning is back to balanced territory. This in turn implies that fresh buying interest is needed in order to trigger more sustained currency upside. This appears unlikely, with event risk as related to US politics remaining high. From that angle, we believe the currency’s short-term outlook may be one of range-trading. In the grand scheme of things, however, we retain a favourable stance on the CAD," CACIB adds.