Canadian Dollar: Further gains seen against US Dollar - Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret describe the Canadian Dollar (CAD) as steady despite renewed US–Canada trade tensions and targeted import bans. They highlight improving CAD fundamentals and a lower fair value estimate for USD/CAD near 1.3736. Technicals are described as USD-bearish, with resistance in the low/mid-1.39s and scope for a decline toward the 1.3500/1.3550 region.

CAD fundamentals improve as USD softens

"The CAD is all but unchanged on the session, a stoic response to the latest developments in the US/Canada trade spat."

"The CAD pushed higher in early trade yesterday as markets chewed over President Trump’s weekend post on “Canada’s (currency) dollar imbalance” but ultimately concluded, as we did ourselves, that there was not too much to read into the comment from the CAD perspective at this point."

"If the White House does have a beef with the low CAD, some further clarity is required. News late yesterday that the president was banning some Canadian dairy, alcohol and motorcycle goods has had little impact on the CAD."

"These latest US measures come into force on September 29th. Meanwhile, underlying CAD fundamental drivers continue to improve. Our fair value estimate for spot has edged down to 1.3736 today."

"Bearish—USD/CAD is maintaining a tight range on the day but underlying technical dynamics are USD-bearish. USD gains from the late August low stalled and reversed last week. That sets firm resistance in the low/mid 1.39 zone and suggests the USD downtrend from the mid-year peak is resuming."

"Trend momentum is USD-bearish across short-, medium-, and long-term studies, meaning that moderate USD gains (through the mid-1.38s) are likely to draw selling interest. USD support is 1.3715/35 ahead of the decline back to the 1.3500/50 region."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)