CAD makes limited progress on softer USD – Scotiabank

The Canadian Dollar (CAD) is up the least against the USD among the G10 currencies so far today, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD underperforms on the day

“That is probably because it was up the most on the strong USD overall last week. CAD outperformance was helped by narrower US/Canada spreads last week but scope for more CAD strength seems limited, however. In contrast to what are expected to be mostly positive key US data releases this week, the Canadian data release of most significance—GDP on Friday—may show growth momentum ebbing somewhat.”

“The soft USD tone overnight drove USDCAD below support at 1.3945/50 briefly. This area remains pivotal in the short run, I think. A clear break back under support could see spot ease back to the 1.3800/50 zone—which should represent deep value for USD buyers. Late morning European trade was a little more USD-positive, however, and a push back above 1.4020 resistance could see funds retest 1.41.”

“One quibble from the USD-positive perspective on the charts was its failure to hold the weekly break above 1.4040 retracement resistance last week. That could be a pointer to more chop and consolidation in the next few weeks.”