USD/CAD: 'Reacting To The Good Not Bad'; Where To Target? - CIBC USA, LLC

CIBC FX Strategy Research notes that the CAD has weakened further against the USD as of late but the move continues to mainly reflect improved sentiment in the US rather than a worsening mood on Canada.
"Two-year yields in Canada, which tracked the C$ stronger since mid-year, haven’t come down much yet. However, the convergence of the respective surprise indexes in Canada and the US has come as much from the data fl ow here worsening, with latest trade figures adding to the list that shows a slowing in economic growth in Q3," CIBC adds.
"So there’s room for short-term bond yields in Canada to come down, dragging the C$ with it," CIBC concludes.
CIBC targets USD/CAD to reach 1.26 by end of year and at 1.30 by Q1 of 2018.