CAD holds range for now – Scotiabank

The FOMC decision failed to pull the CAD out of its wide range. But the CAD escaped yesterday’s session swings to recover to the mid-1.35s this morning amid broader USD weakness and firmer equities and commodities, notes Shaun Osborne, Scotiabank’s chief FX strategist.

CAD gains one cent from overnight low against USD

“Spreads, which have been widening in favor of the USD, should probably stabilize at least. Note that USD/CAD is trading slightly below the estimated fair value (1.3583) this morning. BoC External Deputy Governor Nicolas Vincent speaks to the Sherbrooke Chamber of Commerce around 08:15 ET. His talk is titled ‘Monetary Policy Decision Making: Behind the Scenes,’ but I doubt the comments will tell us much more than we already know.”

“USD/CAD rose to mid-1.36s in early Asian trade before slipping a cent over the balance of the session. Minor gains from European session lows around 1.3540 are not yet strong enough to suggest a base is developing for the USD.

“Trend momentum signals tip the USD-bears on the near-term chart, and a close at the low for the USD on the day (which would confirm an external bearish reversal) would suggest creating downside risks for spot and a potential retest of the low since late August at 1.3440.”