FX markets rapidly priced in the economic impact of lower oil prices after the BoC's surprise January move. Since then USD-CAD has been largely range-bound, trading within 1.2350-1.2835.
The failure of fundamental data to capitulate or the BoC to commit to further easing left USD-CAD without a further catalyst to the upside.
However, the reasons to be short CAD remain unchanged - a nearly 50% decline in its key commodity price, over-reliance on the oil sector, and high household debt combined with an extended housing market.
"We expect fundamental data to reflect these vulnerabilities and the BoC to respond with easing in May and July. This may provide the next leg of CAD weakness. We would use any CAD appreciation following the BoC remaining on hold in April as an opportunity to go short and repeat our call for USD-CAD at 1.30 by end-Q2-2015", said Standard Chartered in a report on Wednesday
