CAD quiet ahead of Macklem speech – Scotiabank

The Canadian Dollar (CAD) is trading in a tight range and entering Tuesday’s NA session with a marginal gain against the US Dollar (USD)

Markets to fade BoC easing

"Fundamentals remain supportive as US-Canada yield spreads threaten fresh lows. The outlook for relative central bank policy will remain the primary focus for the CAD as market participants look to BoC Gov. Macklem’s 2:45pm ET speech in Mexico City. Macklem will be speaking on ‘Flexible-inflation targeting in a more shock-prone world’ and his comments are likely to provide some insight into the BoC’s thinking ahead of the next rate decision on September 17."

"Markets are still pricing about 8bpts of easing for the meeting, however the scope for easing remains limited given that inflation remains well above target. Trade policy developments—easing in US/Canada tensions—are another consideration that should keep the BoC on the sidelines for now."

"USD/CAD’s technical picture is somewhat mixed as market participants consider the conflicting signals offered by Friday’s bearish outside reversal and balance them against bullish trend and momentum indicators. The near-term balance of risk favors a push below 1.3800 and we look to a near-term range bound between 1.3780 support and 1.3920 resistance."