CAD weak and extending Thursday’s decline – Scotiabank
The Canadian Dollar (CAD) is weak, down 0.3% against the US Dollar (USD) and extending Thursday’s losses as it gives up the bulk of this week’s early gains, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
CAD is challenged by wider spreads
"Wider US-Canada yield spreads are offering a modest headwind to the CAD however the broader fundamental picture remains unchanged as we note that our USD/CAD fair value assessment continues to hover around the mid-1.35s (1.3553 specifically). There are no domestic releases scheduled for Friday and we note the absence of any major data releases ahead of next Wednesday’s Bank of Canada rate decision."
"The Governing Council is expected to leave rates on hold at 2.75% leaving market participants to focus on the statement tone and press conference. Recent communication has been broadly neutral with a slight dovish lean in terms of the balance of risks. Markets are reflecting this and pricing about 11bpts of easing by year-end, offering the CAD a source of potential support if next week’s BoC were to deliver a decidedly neutral tone."
"The medium term bear trend has flattened out over the past month or so, and recent price action has offered a recurring series of lows just beneath the 1.36 support level with resistance observed in the mid-1.37s. The RSI is reflecting this shift toward neutral, as we’ve observed a drift from the mid-June sub-30 (oversold) lows toward a decidedly neutral reading closer to 50. We see a near-term range roughly bound between 1.3600 support and 1.3720 resistance."
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FXStreet Insights Team
FXStreet
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