CAD is trading steady, outperforming on crosses – Scotiabank

FXStreet Insights Team FXStreet

The Canadian Dollar (CAD) is once again trading flat against the US Dollar (USD) as it consolidates its recent losses and sees notable outperformance against most of its G10 peers.

No reaction to fiscal announcement ahead of trade data

"The CAD’s lower beta risk profile remains an important consideration in periods of broader economic uncertainty (France, Japan) as Canada’s close economic ties to the US tend to dampen volatility. Domestically, markets have offered little reaction to Monday’s fiscal announcements that saw PM Carney shift Canada’s federal budget to the fall. Carney also announced a change in capital expenditure definitions, a key pillar of the upcoming budget."

"US-Canada yield spreads remain steady, offering little in terms of fundamental direction. Risk reversals are also steady, and close to neutral. Near-term risk lies with the 8:30am ET release of international merchandise trade data, with expectations of a widened deficit in August. BoC risk lies with SDG Rogers’ speech on Thursday. Our USD/CAD FV estimate is marginally higher, at 1.3713."

"USD/CAD’s recent gains are showing signs of early exhaustion with a flattening out of the RSI and a clear struggle to extend beyond the mid-1.39 congestion area that coincides with the 61.8% retracement of the September 2024-February 2025 rally. We look to material resistance at the 200 day MA (1.3982) and the psychologically important 1.40 level. We look to a near-term range bound between 1.3920 and 1.3980."

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.

GBP/USD clings to gains near 1.3400

GBP/USD retreats after reaching a three-week high above 1.3430, challenging the 1.3400 yardstick on Thursday. Although easing political uncertainty in the UK helps the quid limit its downside, escalating tensions in the Middle East support the Greenback, keeping Cable under scrutiny.

EUR/USD faces resistance around 1.1450

EUR/USD keeps the bid bias although it seems to have met a tough hurdle around 1.1450 on Thursday. The pair’s advance follows the bearish tone in the US Dollar despite escalating tensions in the Middle East and a broad-based cautious stance from market participants.

Gold flirts with two-day highs, approaches $4,130

Gold stages a modest rebound on Thursday, setting aside a three-day losing streak and managing to surpass the $4,100 mark per troy ounce. However, steady geopolitical tensions have revived concerns over persistently high global inflation, reinforcing expectations of higher rates across the board and somewhat curtailing the yellow metal’s upside potential.

Bitcoin stalls as mixed ETF flows, renewed US-Iran tensions cap upside

Bitcoin trades at $63,000 on Thursday, recovering slightly after facing rejection near $64,000. Renewed geopolitical uncertainty has dampened risk appetite, limiting BTC upside potential.

Japan may be changing its Yen strategy, but markets don’t look scared

Japan may be changing its intervention playbook, but that might not be enough to rescue the battered Yen. With USD/JPY hovering at four-decade highs, the currency’s weakness is being driven less by speculative pressure and more by a powerful structural force: the wide US-Japan rate gap.

Bye, forward guidance: How to trade when central banks choose silence

Central banks have spent years telling markets what might come next. Now, traders face the possibility that they say a lot less. From the Federal Reserve to the European Central Bank and the Bank of England, policymakers are pushing back against forward guidance.