Wednesday, October 1, 2014
USD/CAD hovered in a tight 1.1200-1.1220 range overnight before slipping modestly in North American trading. Pair last at 1.1195 vs 1.1196 late Tuesday. Many market watchers expect the Canadian dollar to continue its retreat in the face of the broadly strengthening greenback, but BMO says it's actually trading moderately higher than where its key drivers, including the two-year and five-year swap rate differentials, predict it should. "General USD demand and interest rate differentials have basically worked in tandem to push USD/CAD higher since Monday," BMO says. Firm is of the view that the loonie is somewhat undervalued, but sees USD/CAD likely staying above strong support between 1.1200 and 1.1150.