CAD holds narrow range – Scotiabank

It’s another day of limited movement for the Canadian Dollar (CAD) with the US Dollar (USD) plying a familiar range in the low 1.40 region, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

CAD remains susceptible to risk sentiment

"Price action yesterday was illustrative of the fact that external forces remain a key driver of CAD short-term sentiment, with shifts in US equities helping drive the CAD’s intraday performance."

"More broadly, news of more potential auto production shifts from Canada to the US will add to the gloom hanging over the currency and while the CAD continues to look very 'cheap' relative to our fair value assessment (1.3781 today), there is little sign of funds realigning itself with our equilibrium estimate."

"The intraday and daily charts continue to reflect some USD-negative price signals from earlier this week and while the USD has edged back from Tuesday’s peak of 1.4080 (which is marked by a bearish 'shooting star' candle signal on the daily chart), USD losses are very limited still. USD support remains 1.3970/75 and 1.3930."