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Canadian dollar poised to extend recovery vs US dollar

Societe Generale said USD/CAD is mean reverting toward 1.3933 from 1.4248, with a break near 1.3900 marking a 50% retracement of the May to June rally.

Reported · Written up by our desk · Major Pairs

Societe Generale analyst Kenneth Broux said the Canadian dollar has rebounded to its strongest level in two months, and the USD/CAD pair is now mean reverting toward 1.3933 from 1.4248.

Broux noted the pair is trading close to fair value on 2-year spread models, and pointed to a potential test of 1.3900, which would represent a 50% retracement of the May to June rally.

He attributed the move to support from stronger WTI and reduced speculative shorts, arguing the currency recovery could extend from current levels.

The view comes as FXStreet said traders are focused on the upcoming US consumer inflation report, which is expected to influence the Federal Reserve’s next interest rate decision and the US dollar’s valuation.

Latest closeWTI crude $83.42 ▲1.6%

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