Loonie languishes below 1.2800 irrespective of the BoC’s business outlook returning to positive territory for the first time since the pandemic started in Q4. The Dollar continues to rebound as shorts are squeezed and yields ratchet higher again to the detriment of high betas and risk assets, with the index now forming a base above 90.500 to target more pre-Xmas and New Year peaks. In fact, the highs from December 23 and 22 have already been surpassed on the way up to 90.730, leaving little to offer resistance ahead of 91.000 and the 91.022 apex on December 21. The latest bout of Buck buying began when stocks started to wobble in APAC trade overnight, and picked up pace when US market participants returned to sell Treasuries ahead of this week’s auctions and the ongoing bear-steepening is providing further impetus for funds and specs to unwind oversold positions.
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Over 40 pips up floating. Look to cover entries if you are short.