USD/CAD: A clear push under 1.3595 targets a drop to 1.3550 – Scotiabank

The Canadian Dollar (CAD) is tracking marginally higher against a generally stronger USD on the session so far but gains are marginal and essentially, spot is holding a tight range just above 1.36—a six week high for the CAD, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

May test a major support in the upper 1.34s

“On expectations to marginally weaker than expected CPI data yesterday has cemented market expectations that the BoC will cut rates 25bps on September 4th but do not add much to the broader outlook for rates.”

“Spot is trading bang on our fair value estimate (1.3605) this morning. Recent CAD gains look fundamentally justified but there may be little scope for USD/CAD losses to extend at this point from a fundamental point of view. Short-covering could give the CAD some added positive momentum, however, if USD/CAD losses extend deeper below 1.36.”

“The trend lower in USDCAD is well entrenched on the intraday and daily chart but USD losses are holding a little above major support at 1.3595, defined by the 200-day MA and recent (May/July) range lows for spot. A push lower looks possible as broader momentum behind recent USD losses picks up. A clear push under 1.3595 targets a drop to 1.3550 and puts a test of major support in the upper 1.34s on the radar. Resistance is 1.3640/50.”