Canadian Dollar: Gains eye 1.3981 against US Dollar – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret report USD/CAD is flat after the Bank of Canada (BoC) left policy unchanged and maintained a cautious tone on growth and inflation. Governor Macklem downplayed the Canadian Dollar (CAD) in policy decisions, while Scotiabank’s fair value estimate for USD/CAD has slipped to 1.3974. They see scope for further CAD improvement, with technicals pointing to deeper USD losses toward key retracement support.

CAD fundamentals and charts favor gains

"The CAD has traded in a tight, flat range overnight and is little changed versus the USD on the day. The Bank of Canada left policy unchanged yesterday, as expected. The policy statement remained cautious—removing references to higher and lower interest rates and noting that growth is improving but facing some risks while inflation is high but slowing. "

"The governor lent heavily on uncertainty in his press conference and continued to stress that the bank remained ready to act as appropriate. In response to the question, Governor Macklem said the CAD not a major issue in decision making. "

"Factors driving the CAD continue to track slightly more positively for the CAD; our fair value estimate for spot has edged down to 1.3974, the lowest in nearly a month. The CAD has some additional room for improvement."

"Bearish—Spot losses through retracement support (23.6%) of the May/June rally at 1.4083 and bearish-leaning oscillators retain our focus on USD losses extending to the 38.2% retracement support at 1.3981. Mild USD rebounds remain a fade ahead of the low/mid-1.41 area."

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

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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.

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