Softer the firmer goods help – Scotiabank

The Canadian dollar (CAD) has eased against the stronger US dollar (USD) over the past week, but losses are relatively limited, leaving the CAD as the best performing G10 currency over the past five days, down just under 0.5 % (compared to a 3% decline in JPY and NZD and a 1.8% decline in AUD), notes Shaun Osborne, chief FX strategist at Scotiabank.

Softer CAD but holds recent range

CAD is holding in the recently effective trading range. US-Canada spreads have widened, supporting the firmer USD tone, but 2Y spreads are also holding in recent ranges.”

“Tensions in the Middle East are supporting crude oil firmer, while broader gains in non-energy commodities over the past month are leading to a rebound in Canadian terms of trade, which should also help limit pressure on the CAD.”

“The firmer USD undertone has returned to the 1.36 area and on the face of it, there is nothing to suggest that the gains will not extend a bit further to retest the September peak just below 1.3650. Little, that is, apart from a group of moving average resistance points (50, 200 days, 50 weeks) converging around the 1.36 point, which may serve as a ceiling for the USD for now. Support is 1.3550.”