Richard Franulovich, Strategist at Westpac, reiterated the ‘buy on dips’ stance of the pair in the near term. Key Quotes “With WTI threatening a break of $35/bbl into a new higher price range, risks on USD/CAD seem skewed to a test of 1.30 near term”. “Poloz’ messaging on the economy next week likely sounds more upbeat too given the upside surprise on Q4 growth, stability in energy prices and evidence that US Q1 momentum is picking up”. “However, we doubt that the “green shoots” will prove sustainable – the full force of the overall commodity price shock is yet to play out, the labour market remains sluggish and numerous business surveys (BoC, RBC and CFIB) all flag further ongoing weakness”. “Stronger than expected Q4 GDP is not what it seems in any case, with domestic demand contracting in the quarter. Potentially more supportive fiscal policy be a may be a game changer but that will have to await the federal budget on 22 March and that is not assured”. “Base case for the time being is to buy USD/CAD into 1.30, looking for the longer term uptrend to resume into Q2”. For more information, read our latest forex news.