The Canadian Dollar (CAD) is trading little changed from where we were for most of the session yesterday, Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret report.
CAD remains quite undervalued versus USD
“Spot trends remain a slave to the broader USD tone and technical drivers at the moment. Factors that typically influence the CAD are somewhat mixed— risk appetite is subdued, spreads have edged a little wider but crude oil prices have firmed on lower than expected US stockpiles.”
“Our fair value estimate for spot has edged fractionally lower from yesterday to 1.3691, leaving the CAD looking still quite undervalued (around one standard deviation below estimated equilibrium). That may help limit losses, absent a resumption of broader gains in the big dollar. Canada releases IPPI data at 8.30ET.”
“The situation on the charts is little changed. The broader USD uptrend is well-supported via bullish trend momentum signals on the intraday and daily oscillators. But there are still indications from price action that gains are finding it hard to extend through the 1.3880 area. Minor dips are likely to remain underpinned for now (to the low/mid 1.38s). A solid push through 1.3880/90 could see USD gains extend to retest 1.40.”
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