USDCAD: Fair value estimate stands at 1.4068 – Scotiabank

Scotiabank’s analysts highlight a softer Canadian Dollar, trading defensively with G10 peers. Wider US–Canada yield spreads remain a headwind as Bank of Canada (BoC) expectations firm, with October priced for 14 bps and December for 37 bps of tightening. Their fair value estimate for USDCAD stands at 1.4068.

Yield spreads keep pressure on Canadian Dollar

"The outlook for relative central bank policy remains a dominant driver and the continued widening in US-Canada yield spreads presents a meaningful headwind for the CAD."

"Rate expectations for the BoC are firming, with the October meeting priced for 14bpts of tightening and the December meeting priced for a cumulative 37bpts."

"In terms of data, this week’s release calendar is limited to the monthly GDP figures for July, expected to show a flat m/m print and a deceleration in the annual pace of growth from 2.0% to 1.4%."

"Our FV estimate for USDCAD is currently at 1.4068."

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