USD/CAD is moving up and down in a narrow channel at around 1.3390. Economists at TD Securities expect the pair to test the 1.3500/20 zone in the short-term.

CAD is likely to lag on most crosses

“Currently, the CAD is displaying a lot of sensitivity to data surprises, risk sentiment and broad USD dynamics. This is likely to persist for some time. We would pay particular attention to Jan/Feb data as that is likely to motivate asymmetries in curve pricing around the BoC later this year.” 

“For now, we think CAD is likely to lag on most crosses.”

“With disappointing earnings guidance, there may be room for risk to extend lower. That leaves USD/CAD at risk of a test into 1.3500/25 near-term, where we see a lot of technical significance.”