USD/CAD still looks a bit undervalued, relative to our equilibrium estimate (1.3486) currently.

Somewhat narrower spreads are CAD-supportive and a rebound in crude today is a plus for the CAD. But generally, soft commodities and slack terms of trade are working against the CAD at the same time. These factors are tilting risk towards a slightly (at least) softer CAD.

Seasonality (January is the second-best month of the year for USDCAD in terms of average monthly returns since the 1990s) also leans towards the risk of some additional USD strength in the next few weeks.