USD/CAD: Break below 1.28 coming? - BBH

After making new lows for the year to start last week, the Canadian dollar recovered, but the US dollar found support in front of CAD1.28, according to Marc Chandler, Global Head of Currency Strategy at BBH. 

Key Quotes

“The data before the weekend--stronger than expected CPI but weaker than expected retail sales--captures the conflicting pressure on the central bank--and illustrates why the market is pushing out into Q3 the next rate hike.”

“The CAD1.28 area represents a 38.2% retracement of the US dollar's rally since early February when it was near CAD1.2250.  A move above CAD1.30 would signal the end of the correction, while a break of CAD1.28, especially resistance can be tested first, could signal a better period Q2 outlook for the Canadian dollar.  It has lost 2.5% against the greenback since the start of the year, making it the weakest of the major.”