USD/CAD: Resistance remains 1.3725 – Scotiabank

The Canadian Dollar (CAD) is little changed on the session but is holding its minor improvement against the US Dollar (USD) around the 1.37 point. Improved risk appetite and firmer stock market trends are helpful for the CAD but the setback in crude prices over the past couple of sessions implies a slight downturn in the recent improvement in Canadian terms of trade and may help check CAD gains in the near-term, Scotiabank’s chief FX strategist Shaun Osborne notes.

CAD may push above 1.3725

“In the context of a generally softer USD, however, scope for CAD losses should remain limited and the potential for a further nudge up in the CAD (to the mid/upper 1.36s) remains. Wholesale Sales today are expected to drop 0.6% in June, following the weak May report (-0.8%). Estimates are in line with the preliminary data provided with the last report.”

“The CAD is making marginal technical headway against the USD after securing a clear push under USD support at 1.3725 this week. The break under retracement support (61.8% of the June/July move up) targets additional losses to at least 1.3675, possibly 1.36.”

“The USD’s push under the 40-day MA (also around 1.3725) implies a broader shift in tone may be developing for USD/CAD. Resistance remains 1.3725, ahead of 1.3765/75.”