CAD fails to take advantage of softer USD tone – Scotiabank

FXStreet Insights Team FXStreet

The Canadian Dollar (CAD) is trading marginally lower in overnight trade but is holding a tight range around the 1.3850 point, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

CAD underperforms on the day

"There is little new news for markets to trade on the and overnight moves reflect a soft tone for North American FX generally. CAD sentiment remains weak, with spot diverging from our fair value estimate (1.3646) by the most this week since the early spring’s uncertainty driven by US trade policy."

"The CAD has failed to reflect narrower US/Canada short-term spreads and appears to have been weighed down by, rather than benefitting from, the softer tone in the USD broadly which developed through August. From that point of view, its hard seeing the CAD staging a significant recovery at this point."

"USD/CAD retains a mild upside bias but price signals have recently turned mixed, suggesting a degree of indecision in the market about the near-term direction of the USD. We note USD support at the 40-day MA at 1.3775 ahead of potential bear (Head & Shoulders) trigger at 1.3730, connecting the early and late August lows for USDCAD. Resistance is 1.3855 ahead of 1.3925."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

160.80: Japanese Yen remains close to nearly two-year lows

USD/JPY inches lower after four days of gains, trading around 160.60 during the Asian hours. The USD/JPY pair surged to 160.80 the previous day, marking its highest level since July 2024 and significantly heightening speculation that Japanese authorities could soon intervene to support the struggling Yen.

Australian Dollar remains in positive territory after paring recent gains

AUD/USD pares its daily gains, remaining in the positive territory and trading around 0.7010 during the European hours. The pair appreciated as the Australian Dollar received support from prevailing hawkish sentiment surrounding the Reserve Bank of Australia’s policy outlook.

Gold adds to recent losses, remains below $4,250

Gold struggles to attract buyers on Thursday and remains in negative territory below $4,250 per troy ounce. The precious metal finds some support from the easing of tensions in the Middle East, which has helped stabilise market sentiment, but broad-based US Dollar strength following the Fed meeting continues to weigh on price action.

Crypto Today: Bitcoin, Ethereum and XRP pare losses on increasing bets of Fed tighter monetary policy

Cryptocurrency prices are broadly moderating downwards on Thursday, as market participants assess the impact of the Federal Reserve’s (Fed) hawkish monetary policy stance.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.

The next big AI trade may not be about chips or software

Artificial intelligence has already created some of the biggest winners in modern market history. Chipmakers have surged, data centre construction is booming, and electricity demand forecasts are changing globally.