The USD’s recent appreciation seems to have run out of gas again in the 1.36/1.37 range, perhaps not unlike the spring. Historically, USD/CAD forays above 1.35 tend to be limited in terms of scope and duration. 

CAD gains – so far – are limited and there is enough event risk ahead to keep markets cautious on the prospects for the CAD recovery to extend. But it remains somewhat undervalued and perhaps oversold on the charts. 

Friday’s CFTC data reflected a further build-up on net CAD short positioning – just as the CAD is showing tentative signs of steadying – again, similar to the March/April period. A push under 1.35 may put some heat on some of the more freshly minted short CAD positions.