USD/CAD needs to hold below 1.2640/50 for more downside momentum – OCBC

USD/CAD has recovered and it is trading above the 1.2700 level. Still, economists at OCBC Bank expect the pair to remain under pressure, especially on failure to hold the 1.2640/50 zone.

More downside for the EUR/CAD and GBP/CAD rather than the USD/CAD

“The Bank of Canada followed up its rate hike with some hawkish signalling. Macklem outlined plans to allow the bonds held to roll off and reduce the balance sheet, and did not rule out 50 bps hikes.”

“Stay negative on the USD/CAD, but it will need to hold below 1.2640/50 for more downside momentum.”

“Still prefer downside for the EUR/CAD and GBP/CAD for now, rather than the USD/CAD.”