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Societe Generale’s Kenneth Broux highlights that USD/CAD has broken out of a large consolidation and extended gains towards 1.4250, with the upper part of the prior range at 1.4130 now acting as key support. CFTC data show short CAD positions at their most bearish since December 2025, while Canadian labour data and BoC surveys shape the near-term outlook.
Breakout holds with stretched positioning
“USD/CAD recently broke out from a large consolidation and extended its up move towards 1.4250. A brief pause has materialized after this test, however, signals of an extended pullback are not yet visible. The upper part of previous range at 1.4130 has so far acted as support.”
“Only if this is breached would there be a risk of a deeper down move. The next objectives could be located at projections of 1.4335 and 1.4425.”
“Elsewhere in G10, there aren’t many currencies as tactically oversold like the CAD but there’s no sign that stretched levels beyond 1.42 are enticing opportunistic buyers, positioning for mean reversion.”
“The Loonie traded last up here at the tail end of Liberation Day tariffs in April 2025 but 2y rate differentials have widened perceptibly to 142bp since then, reflecting the repricing of the outlook for the Fed.”
“Short CAD positions climbed to 43.5% of OI, the most bearish since mid December 2025. Technically, the pair broke out from a large consolidation recently; upper part of this range at 1.4130 is an important support.”
“According to the BoC 2Q business outlook survey published yesterday, the Gulf war caused a spike in inflation expectations and is leading Canadian oil producers to boost their investment and production plans. Attention will turn to the labour market data on Friday. After the blowout gain of 87.8k in May (3m average of 28k is first positive reading since January), employment growth is forecast to have moderated to 10k.”
