USD/CAD risks balanced to the downside - Scotiabank

CAD is quiet, consolidating in a tight range while Domestic rate expectations remain firm with OIS pricing roughly 20bpts of tightening for the October Bank of Canada policy decision. 

Key Quotes:

"The 2Y U.S.-Canada yield spread continues to narrow in a CAD-supportive manner, softening to 6bpts following its recent consolidation around 10bpts. Risk reversals are suggestive of a moderation in the premium for near-term protection against CAD weakness and speculative CFTC positioning remains bullish."

"The near-term balance of risk appears to favor CAD strength as we look to a continued retracement of the late July to mid-August decline."