USD/CAD: To remain close to its recent lows – Scotiabank

The Canadian Dollar (CAD) is slightly firmer on the session and while it remains down (0.6%) on the week versus the US Dollar (USD), it remains a clearly better performer overall than its close commodity peers (AUD and NZD are both down nearly 2%), Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD moves towards the 1.3845 hurdle

“The recent range trade in the CAD is just about holding, with this week’s gains barely exceeding the April peak of 1.3846. Although the top of the range held, a swift return towards the lower end of recent ranges is unlikely unless factors (spreads, stocks) move more favourably for the CAD. The CAD looks set to retain a soft tone and remain close to its recent lows against the USD for a little longer.”

“USD drift from the intraday high yesterday and a modest gain for the CAD so far today suggests the immediate risk of an extension higher in the USD has eased. The CAD has its work cut out to show any real signs of an improvement in its technical tone but there may be the makings of a modest recovery in the CAD at least in the short run.”

“Yesterday’s peak was marked by a bearish outside range signal on the 6-hour chart and remember that the USD rally has been looking deeply overextended on the intraday and daily RSI oscillators. USDCAD short-term support sits at 1.3795; below here should see some further improvement in the CAD. Resistance is 1.3845/50.”