USD/CAD: Fade Rallies On 'Wide Valuation Gap' - TD

TD FX Strategy Research likes fading the rallies in USD/CAD, owing to the wide valuation gap we see between the pair and the cyclical drivers.

In that regard, TD models show that the pair remains rich against its implied level. 

"We like the pair lower until the cyclical picture starts to improve...Moreover, our read of the leverage community shows that long USD looks like a stretched trade, suggesting a bit more downside over the coming days," TD adds. 

USD/CAD is trading circa 1.3485 as of writing. 

Source: TD Securities Research