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."
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FXStreet Insights Team
FXStreet
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