USD/CAD: Bullish trend extends above fair value – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret highlight that USD/CAD continues to grind higher as haven demand for the US Dollar dominates, with the pair trading well above an estimated fair value of 1.3543. Short-term technicals are bullish after a clean break above the 200-day moving average, with risks pointing toward the low 1.39s while support sits around 1.3790/00 and 1.3750/60.

CAD pressured as USD haven bid builds

"The CAD continues to drift lower as the dominant force of haven demand for the USD shapes overall FX trading. There is little the CAD can do to fight the trend, especially in an environment of low volume and low conviction trading."

"Fundamental factors have shifted a little against the CAD; front-end spreads have widened somewhat in the USD’s favour and Canadian terms of trade have softened modestly. But spot remains well above our estimated fair value of 1.3543 today."

"CAD losses have extended through the low 1.38 area (200-day MA at 1.3805 today) as the creeping USD bid persists. Trend momentum favours additional USD gains in the short-run, with the relatively easy advance through resistance in the mid-1.37s and (now) low 1.38s reflecting the firm USD undertone. Gains risk extending to the low 1.39s. Support is 1.3790/00 and 1.3750/60. "

(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 daily gains near 1.3350

GBP/USD holds just in positive territory around 1.3350 on Friday as the Greenback keeps a vacillating price action. With Fed rate hike expectations easing and US markets closed for the Independence Day holiday, Cable remains on track to post solid weekly gains.

EUR/USD remains sidelined around 1.1440

EUR/USD holds on to its recent gains and consolidates around 1.1440 at the end of the week as the US Dollar lacks clear direction. In the meantime, trading conditions remain subdued, with volatility constrained by the closure of US markets for the Independence Day holiday.

Gold flirts with two-week highs, targets $4,200

Gold extends its recovery for a third straight day, advancing toward the $4,200 mark per troy ounce on Friday. The precious metal looks set to snap a four-week losing streak as softer-than-expected June US NFP data prompt investors to scale back expectations of further Fed tightening.

Crypto Today: Bitcoin, Ethereum, XRP advance amid renewed capital inflows

Bitcoin maintains its upward momentum, holding above the $61,000 mark at the time of writing on Friday. Major altcoins such as Ethereum and Ripple are also posting gains, signaling a modest uptick in market sentiment and renewed risk appetite among investors.

The Iran war failed to trigger a recession. Can the US economy keep defying expectations?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.