The Canadian Greenback (CAD) is a marginal outperformer on the day among the many main currencies (together with the MXN) by dint of holding comparatively regular towards the US Greenback (USD) as different currencies drift again forward of the weekend, Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret report.
USD/CAD’s short-term downtrend retains some unfavourable momentum
“The USD stays considerably overvalued towards the CAD within the quick run, in line with our mannequin. The estimated equilibrium this morning sits at 1.3625, not far off from the place equilibrium has been for many of the week. With the narrowing in US/Canada spreads throughout the curve steadying this week and different elements (threat urge for food, commodities) including little to CAD dynamics, the CAD could battle to shut the valuation hole within the quick run—except it will get some assist from the info.” “Canadian employment for July is anticipated to indicate a 10k acquire in jobs however a 0.1 ppt enhance within the unemployment charge over June’s 6.9%. Scotia expects a 20k rise, nevertheless, and one other constructive jobs shock following June’s 83k acquire would carry the CAD. USD/CAD’s short-term downtrend retains some unfavourable momentum on the charts however the transfer decrease isn’t all that dynamic.”
“A push via the low 1.37s to ascertain a brand new, short-term low and take out short-term retracement help at 1.3728 (50% Fibonacci retracement of the late July transfer up within the USD) would add to bearish momentum right this moment and put the CAD on target to check the mid/higher 1.36s. Resistance is 1.3750/75.”
