CAD is significantly undervalued – Scotiabank
|The Canadian Dollar (CAD) retains a soft undertone ahead of Canadian Retail Sales at 8.30ET, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret note.
CAD is soft on the day
"The data might bring some good news for the CAD, with sales expected to rise a solid 1.5% in the June month, a hair lighter than the flash estimate of a 1.6% gain released with the soft May data. The CAD also remains quite significantly undervalued, according to our estimated equilibrium (1.3711 today)."
"Factors driving fair value have weakened slightly over the week but spot is now well over one standard deviation above fair value, with the misalignment nearing the extremes seen in the spring around the tariff uncertainty. PM Carney said he had a 'productive' call with President Trump on trade and security yesterday. They agreed to speak again shortly. No other details emerged."
"Spot gains extended a little further overnight, reflecting the solid technical uptrend on the short-term charts and the firmer tone in the USD that developed after spot pushed above resistance around 1.3880 earlier this week. USD gains to new, short-term cycle highs this week pave the way for a push on to the 1.4000/25 area potentially. There is minor resistance on the daily chart at 1.3925. Support is 1.3875/80 now and 1.3830/50."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.