USD/CAD: Bullish trend targets low 1.39s – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret highlight that the Canadian Dollar (CAD) is steady to slightly firmer versus the Dollar despite weak risk appetite, helped by a modest bid for commodity currencies. They point to a historically strong April for CAD since the 1970s and note USD/CAD has broken above its 200-day moving average, keeping focus on further upside toward the low 1.39s.

Seasonal tailwinds but chart stays bullish

"The CAD is steady to marginally firmer against the USD on the session, reflecting a modest bid for other commodity currencies on the day despite weak risk appetite. With March more or less in the books, the CAD might be able to look forward to the coming month."

"Seasonal trends since the early 1970s reflect a distinct bump in the CAD’s performance in April—a solidly positive month for the currency against the USD. More recent trends have been a little more nuanced but the tendency for the CAD to strengthen against the USD remains."

"Spot gains through the 200-day MA (1.3806) this week and bullish short-term trend momentum signals keep the technical focus on the topside for funds towards 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 hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold eyes $4,400 as receding Fed hike bets undermine USD

Gold is looking to build on Friday's bounce from the $4,300 neighborhood as reduced bets for an immediate Fed rate hike keep US Dollar bulls on the defensive and support the non-yielding bullion. However, the US-Iran standoff could limit deeper USD losses, warranting caution before positioning for the resumption of the XAU/USD pair's recent uptrend to its highest level since June 5.

Week ahead: Summer lull could be tested by geopolitics and central bank expectations

It has been a relatively monotonous week, with the US dollar desperately trying to recover from last Friday’s nonfarm payrolls-induced losses, the main equity indices trading mostly sideways amidst a quiet earnings calendar, and sovereign bond yields reminding everyone of their pivotal role in the current financial system. These market moves are partly connected to the Middle East developments.

Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.