CAD stuck in Narrow range – Scotiabank

FXStreet Insights Team FXStreet

The Canadian Dollar (CAD) is steady and rangebound, supported by bond market dynamics but capped by softer energy prices and equity volatility. USD/CAD trades slightly below fair value, with resistance near 1.38 and support in the low 1.37s keeping price action contained, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USMCA comments limit USD upside

"The CAD is little changed on the session and remains generally rangebound. Trends in cash bond and swap spreads remain CAD-supportive but equity market volatility and softer energy prices are moderate headwinds for the CAD. The CAD’s fair value estimate has slipped a little as a result (1.3805 this morning), leaving the USD still trading at a slight discount to its estimated equilibrium."

"That may restrain the CAD somewhat and help sustain range trading for now. Bloomberg reported late yesterday that USTR Greer had indicated to US lawmakers in a briefing that he supports the US remaining in the USMCA but the president will keep his options open."

"The CAD has slipped into a sideways range trade after the early week drop to the low 1.37 area. The ceiling on funds looks fairly solid at 1.3790/00. A push above here may see the USD rebound extend to the mid/upper 1.38s. Support is 1.3725/30."

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.

EUR/USD faces extra pressure, drops below 1.1800

EUR/USD trades on the defensive, slipping back below the 1.1800 support on Thursday, all in response to decent gains in the US Dollar. Earlier on Thursday, the ECB matched consensus and left its policy rates unchanged, while President Largarde delivered quite a neutral press conference.

GBP/USD falls to new lows near 1.3530

GBP/USD extends Wednesday’s pullback on Thursday, easing lower towards two week lows around the 1.3530 area. Ongoing strength in the Greenback and the dovish hold from the BoE at its earlier meeting are keeping demand for the British Pound on the defensive for now.

Gold remains offered around $4,800

Gold is back under pressure on Thursday, slipping back towards the $4,800 region per troy ounce. A firmer US Dollar is weighing on the yellow metal, even as the broader mood remains risk off. That said, falling US Treasury yields across the curve are helping to cushion the downside and, for now at least, are limiting the depth of the pullback.