USDCAD - Poised to enter the 'sell-zone'

The Canadian dollar is on the defensive as quarter-end demand for dollars, a shift back to a pessimistic outlook for Europe and concerns on the global economic growth outlook boost US dollar buying. The short-term USD/CAD technicals suggest a 0.9950 print is on the cards on a succcesful breach of 0.9820 resistance.

In my opinion, USD/CAD strength will be short-lived and more a factor of month-end and quarter-end pressures, rather than a whoelsale shift in the outlook for the currency pair. The CNOOC/Nexxen bid for CAD 15.1 billion is likely to be approved and close next quarter which would certainly cap a USD rally. Consider taking advantage of near-term CAD weakness and sell USD/CAD between 0.9840 and 0.9920 (stop above 1.0070 for a Q4 move to 0.9440.