The CAD looks cheap, relative to recent moves in oil prices and risk appetite. Relative rates may be less relevant, although the case for further Bank of Canada (BoC) tightening remains robust. As with other central banks, the outcome will be data-dependent and so the July employment report (4 August), July inflation data (15 August), and June retail sales (23 August) will be key market pinch points. 

We look for USD/CAD to move lower in the coming weeks and break through support at 1.31.