Archived IMT (2008.12.10)

I warned CMC clients yesterday in the event of a 75-bp cut, CAD downside is expected to broaden, with USDCAD likely to overshoot to as high as 1.2720-40 before a retreat towards 1.2660s is guided by rallying equities. USDCAD topped out at 1.2740s before retreating below 1.26. Current decline in risk aversion and modest rally in commodities may extend losses in USDCAD towards 1.2520s, leaving resistance intact at 1.2720.