CAD slips, fails to benefit from pro-risk mood – Scotiabank

The Canadian Dollar (CAD) is modestly lower on the session, unable to find any lift today from the bid for its FX commodity cousins or global stocks, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Retail Sales expected to drop

"While our CAD fair value estimate continues to point to a modest undervaluation (today’s estimated equilibrium sits at a fractionally lower 1.3535), the CAD may struggle to progress in the short run absent a broader tun lower in the USD. Canadian Retail Sales are expected to fall 1.0% in May, in line with the preliminary decline reported with the April data."

"Looking forward, seasonal trends are also poised to turn somewhat less favourable for the CAD over the late summer period. That trend coincides with (and may be somewhat contingent on) equity markets typically experiencing more volatility over the period, however."

"USD/CAD’s rebound from the upper 1.35 zone yesterday may mark the low point for funds in the short run. Short-term price signals are USD-bullish after an outside range higher formed yesterday morning. Broader trend dynamics remain USD-bearish though so it may be a case of USD/CAD pushing higher briefly before the downtrend resumes. Look for USD resistance at 1.3650/75."