The Canadian Greenback (CAD) is weak, down 0.3% vs. the US Greenback (USD) however a relative outperformer towards the entire G10 currencies with the CAD’s peer currencies displaying a lot better declines in response to the US/China commerce détente, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
Markets concentrate on spreads
“Fundamentals are shifting towards the CAD, with a continued widening in US-Canada yield spreads as markets pare again their expectations for Fed easing. Our FV estimate for USDCAD has climbed to 1.3922 and the estimate is more likely to present additional positive factors as buying and selling in Canadian bonds will get underway.”
“For the CAD, near-term motion is more likely to proceed to be pushed by broader developments and the market’s tone. The restoration in unfold correlations is notable and displays a transparent return to fundamentally-driven motion within the CAD. Domestically, this week’s launch calendar is proscribed to constructing permits, housing begins, and manufacturing gross sales knowledge towards the tip of the week.”
“USD/CAD has climbed to recent native highs with a transparent break of the prior vary excessive round 1.3900. The September-February rally continues to border the necessary technical ranges to observe, and the break of the 61.8% retracement (1.3944) now shifts our focus to the midpoint of the vary simply above 1.4100. The RSI has damaged above 50, into bullish territory, and is confirming the strikes in spot. For help, we glance to the 1.3900-1.3850 space.”
