USD/CAD: Range trading holds above 1.37 – Scotiabank
Scotiabank strategists Shaun Osborne and Eric Theoret note that the Canadian Dollar is sliding on weaker Canadian employment data and geopolitical concerns, even as US data also softens. They see policy decisions from the Bank of Canada and Federal Reserve as key event risks, but expect no rate changes. Despite recent CAD losses, they judge downside risks limited while the USD/CAD consolidation between 1.3525 and 1.3760 persists.
CAD pressured but downside seen limited
"The CAD is sliding into the weekend, reflecting a combination of anxiety about the developments in the Middle East on the one hand and much weaker than expected Canadian employment data on the other."
"CAD losses today are deviating sharply from our FV estimate but short-term US-Canada spreads have widened after the Canadian jobs data which will see the estimated equilibrium move higher Monday, all else equal."
"The degree of stretch is still significant, however. Correlations are generally weak between the CAD and key factors as equity market volatility is offset by higher crude prices. Markets will have to keep balancing these risks in the short run but we think the CAD still offers some fundamental value above the 1.37 area."
"Policy decisions in Canada and the US Wednesday are the prime event risks for the week ahead. Neither the BoC nor the Fed is expected to change policy rates but the meetings may cool activity to some extent as markets await guidance on the policy outlook."
"CAD technical signals are mixed. The USD is ending the week on a strong note and pushing above the 40-day MA resistance (1.3658) but a weak/technically bearish weekly signal for USD/CAD last week (bearish outside range) remains intact and longer run trend oscillator signals are aligned negatively for the USD. Look for more range trading as the broader consolidation (resistance at 1.3750/60, support at 1.3525/30) remains intact. "
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
US Midterm Elections Enter Final Stretch: AI Regulation, Medical Subsidies, and Defense Budget Become Wall Street's Three Main Trading Themes—Which Sectors Are Most at Risk?
As the US midterm election campaigns enter the final month of intense competition, AI regulation and government spending in the medical and defense sectors are becoming the primary focus for stock investors.
AI Rack Upgrades Enter a "System Efficiency Battle"! With the OCP Summit Approaching, Jefferies Decodes 1.6T Scaling, Memory Expansion, and High-Voltage Power Supply
AI rack upgrades are entering a "battle for data transmission efficiency": as cluster sizes expand, the bandwidth, latency, and power consumption of high-speed interconnections are increasingly affecting GPU utilization and overall computing power output.
Gold firms, silver slides as oil surge revives inflation pressure - Kitco AM Report
SEC opens door to 3x Bitcoin and Ethereum funds – Here’s the catch!
Crypto prices
More
