Canadian Dollar: Yield spreads drive extended CAD slump – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret note USD/CAD continues its grind higher, with the Canadian Dollar (CAD) in a near straight-line decline since early May as wider US–Canada yield spreads drive weakness. Short-term technicals are described as neutral/bullish, with a break above the upper 1.41 area opening 1.43–1.45, though an extremely overbought RSI suggests any correction could be meaningful.

Overbought rally eyes 1.43–1.45

"The big dollar grind higher has extended a little more this morning but the CAD is one of the more resilient major currencies to the USD’s advance on the day."

"It has been a straight line decline for the CAD since it peaked at 1.3550 on May 1 and it has lost ground daily 80% of the time since then."

"Wider US/Canada yield spreads remain the primary driver of the CAD’s latest slump. That looks quite rich."

"Neutral/bullish—Bullish because the trend is your friend and the push through the upper 1.41 area paves the way for further gains towards 1.43/1.45."

"Neutral because the USD has not looked this overbought in I don’t know how long. The daily RSI is not quite off the charts but, at 88.4, it has not been higher in at least 20 years. The correction, when it comes, should be meaningful. "

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

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.

GBP/USD clings to multi-day peaks below 1.3500

GBP/USD trades with marked gains on Friday, now giving away some gains following an earlier surpass of the key 1.3500 yardstick. Indeed, Cable gathers fresh steam amid the strong offered stance in the Greenback, all after US NFP badly missed expectations in July.

EUR/USD: Post-NFP bounce falters around 1.1580

EUR/USD reverses Thursday’s decline and trades with solid gains in the 1.1560 region, or two-month peaks, on Friday. The pair’s firm performance comes in a context of a sharp correction in the US Dollar as investors continue to assess disheartening US NFP readings.

How Wall Street rigs the game [Video]

In this week’s Live from the Vault, Andrew Maguire is joined by Peter Antico and Sean Stone to discuss the Paradigm of Money - an in-depth expose of financial market corruption, from naked shorting to the two-tier system that protects Wall Street.

XRP Price Forecast: XRP nears critical $1.00 support

Ripple (XRP) remains pressured on Friday, trading around $1.03 at the time of writing. The token appears to hold this current level as support but lacks a catalyst to sustain a knee-jerk rebound toward the next key resistance at $1.10.

Is Gold about to enter its biggest bull run since 2020?

Gold has stormed back into the spotlight and its next move could leave late buyers chasing. On August 5, the yellow metal surged almost 7% – roughly $174 – to close near $4,308 an ounce, posting one of its biggest daily advances in recent history. A weaker U.S dollar, falling Treasury yields, changing Federal Reserve expectations and renewed safe-haven demand all struck at once.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.