USD/CAD: Still holds below the 1.37 area – Scotiabank

The Canadian Dollar (CAD) and the MXN are lagging, along with the soft USD again, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD/CAD resistance is 1.3750/75

“The CAD is still holding below the 1.37 area, however, and made some progress through the upper 1.36s overnight before easing back. Weaker crude prices may temper CAD gains in the short run. The broader risk backdrop appears positive, although US equity futures are showing only marginal gains on the day so far.”

“Our fair value estimate for the CAD continues to shift favourably and sits at 1.3621 this morning, however. The CAD-constructive shift in factors driving the currency outlook should help curb near-term USD rebounds.”

“Spot losses through noted USD support (retracement and 40-day MA) around 1.3725 have prompted the anticipated drop in funds to 1.3675 (the last retracement support ahead of a return to 1.36). The CAD has given up some of those overnight gains in early trade here but the loss of support in the low 1.37s tilts risks towards some additional—perhaps grinding—CAD gains. USD/CAD resistance is 1.3750/75.”