The combination of better data and a surge in rates has fuelled the rally in the greenback. Moreover, the US data surprise index has rallied in November, retracing nearly have the level seen from the peak this summer.
For the greenback, this backdrop provides a nice transition into NFP but we caution about chasing the rally given stretched positioning and valuation.
The greenback continues to trade rich against major 2y rate spreads and we also think the Fed will be a “sell the fact” event, suggesting some modest pullback into yearend.
Still, stronger data could support the USD against CAD and others into Friday’s NFP release so would look to cut long exposure into the weekend. For USDCAD, intraday resistance seen near 1.3505.
Copyright © 2016 TD Securities, eFXnews™Original Article
