USD losses may return below 1.3450/55 – Scotiabank

CAD is trading marginally higher in the session, reflecting the day’s bid for risk assets, notes Shaun Osborne, chief FX strategist at Scotiabank.

CAD holds marginal gain ahead of June and Q2 GDP

“Tighter short-term US/Canada spreads continue to provide broader CAD support, although gains are still slightly ahead of fair value (1.3522), which may limit scope for further CAD consolidation.”

“Canadian GDP is expected to advance marginally in June (0.1%) and hold relatively well in the quarter; the consensus call anticipates growth of 1.8% (SAAR) for Q2, slightly ahead of 1.7% in Q1. Some GDP tracking models indicate that growth may be slightly better than consensus (2% or so).

“Spot remains in consolidation mode – off early week lows, but not really showing any major signs of reversing recent losses. Overnight price action suggests some USD weakness developing from the 1.3490 area tested overnight. Tuesday’s price action implies a potential bearish indicator developing, meaning USD losses could resume below the bearish base at 1.3450/55.”