CAD holds ground in low 1.37s – Scotiabank
The Canadian Dollar (CAD) had a decent run lower last week, with the US Dollar's (USD’s) 1.6% drop through Friday leaving the CAD as one of the better-performing major currencies on the week.
Eare, negative CAD/stocks correlation noted
"That’s pretty good for the CAD, particularly in the context of a soft week for US equity markets. Our correlation screen highlights an unusual, negative correlation between the CAD and US equities at present, in fact. The rolling 1m correlation is –36%, not statistically significant but quite rare."
"As a high beta currency, the CAD typically trades more in line with equity sentiment, meaning Canadian investors is US equities usually get a bit of a cushion from stock market volatility (losses) from the exchange rate. If this situation persists, Canadian portfolios may find themselves underhedged. In a G&M interview Friday, BoC Governor Macklem said there was more volatility in core inflation and that policy makers had 'many factors' to consider before the June rate decision."
"Last week’s USD losses through support (now resistance) at 1.3745/50, the April low and retracement support, sets the CAD up for a further advance in the next few weeks. There is little ahead of the USD in terms of support until the 1.34/1.35 area. Loss of retracement support (76.4% of the Sep/Feb USD surge) rather suggests a full retracement to 1.3420 now."
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FXStreet Insights Team
FXStreet
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