Canadian Dollar: Bullish momentum builds against US Dollar – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) is supported by higher Oil prices and Friday’s strong Canadian jobs data versus weaker US labour figures. USD/CAD fair value has edged down to 1.3868, while technicals stay bearish with key support around 1.3899 and downside targets toward 1.3817.

CAD supported as USD weakens

"The CAD is finding a minor tailwind from higher oil prices this morning to help keep spot pinned back against the low 1.39 area."

"The afterglow of Friday’s solid Canadian jobs report and the contrast with the weaker than expected US labour market data are helping sustain the firmer CAD undertone via modestly narrower front-end US-Canada spreads. Our fair value estimate for USD/CAD edged a little lower to 1.3868 this morning, reflecting these developments."

"Bearish—USD/CAD’s progress lower has been blocked consistently by at the 1.3925 area since Friday, just ahead of noted retracement support (50% of the May/June move up in the USD) at 1.3899."

"A break under the 1.39 area targets a drop to 1.3817 (61.8% retracement). Resistance is 1.3965/70 and (firm) 1.4000/25. "

"Short-term patterns remain USD-bearish as the market consolidates the recent USD decline and USD-bearish momentum is clearly strengthening on the intraday and daily studies."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)