USD/CAD: Softer as firmer commodities help – Scotiabank

The Canadian Dollar (CAD) has softened against the stronger US Dollar (USD) over the past week but losses are relatively contained, leaving the CAD as the top-performing G10 currency over the past five days with a drop of a little under 0.5% (versus a 3% drop for the JPY and NZD and a 1.8% decline in the AUD), Scotiabank’s Chief FX Strategist Shaun Osborne notes.  

CAD softer but holds recent range

The CAD is holding within its recent trading range in effect. US-Canada spreads have widened, supporting the firmer USD tone, but 2Y spreads are also holding within recent ranges.”

“Tensions on the Middle East are supporting firmer crude oil while broader gains in non-energy commodities over the past month are driving a rebound in Canadian terms of trade which should also help limit pressure on the CAD.”

“The USD’s firmer undertone has taken spot back to the 1.36 area and, on the face of it, there is little to suggest that gains won’t extend a little more to retest the September peak just under 1.3650. Little, that is, apart from a cluster of moving average resistance points (50-, 200-day, 50-week) converging around the 1.36 point which may serve as a cap on the USD for now. Support is 1.3550.”