SENTIMENT FAVORS USD DUE TO GREECE RISK: Long USDCAD

The Canadian dollar is entering June with a weakening bias, responding to the broader shift in the US dollar amid a reassessment of the balance of risks to U.S. growth. For CAD, the key development appears to have been a re-balancing of drivers, with a rising focus on the relative central bank policy outlook amid an ongoing moderation in concern over the oil price shock. Oil price movement will remain a key risk for CAD; however, its significance appears to be fading with the BoC’s shift in focus toward the U.S. recovery.

My CAD forecast looks to modest downside into year-end, with a Q4 target of (USDCAD at 1.28).

Technical wise, I believe this a good entry point to go long off a couple of weeks of price retracement and a bullish weekly hammer indicating USD buying.