CAD returns to upper 1.35s – Scotiabank

The Canadian dollar (CAD) is returning to very familiar ranges this morning. Spot is struggling to break away from the upper 1.35 area, and with today’s trading looking relatively light, this may not change in the near term, notes Shaun Osborne, chief FX strategist at Scotiabank.

Technicals lean USD-bearish

“Extended periods of narrow range trading eventually give way to more dynamic directional trading, but there simply isn’t a catalyst to fuel the move right now. Spot remains close to expected balance (1.3548 today).

“Canadian retail sales are expected to rise 0.6% in July (Scotland at 0.5%), with ex-auto sales up 0.3%. Retail activity was weak in June, although volume sales rose marginally. Statcan’s flash estimate for July sales, released alongside June data, showed a 0.6% increase.

“A weak close on Thursday for the USD has developed a large bearish signal outside the range on the daily chart, which tilts near-term risks to the downside and should strengthen USD resistance in the mid-1.36 area here. USD’s minor gains today look consolidated ahead of renewed quality. The loss of near-term support at 1.3535/45 should see USD weakness extend a little further.”