USD maintains a firm tone – Scotiabank

CAD retains a soft tone, notes Shaun Osborne, chief FX strategist at Scotiabank.

CAD remains under pressure on weak commodities

“Spot continues to trade well above the FV estimate (1.3581 today), but variables (such as weaker commodities/trading terms) are somewhat ahead of the CAD, which is likely to keep the CAD tone defensive for now. There are no Canadian data reports due ahead of Friday’s employment report, which could help settle BoC policy expectations at this month’s meeting.”

“Swaps sit on the 25/50 fence with pricing at 35 bps. Yesterday, former BoC Governor Beaudry suggested that the Bank should cut by 50 bps at its next meeting. The USD maintains a firm tone on the intraday and daily charts. USD’s rally from last week’s low has barely stopped and looks a little stretched in intraday studies.”

“But after breaking the September peak and with the intraday and daily DMI oscillators aligned favorably to the USD, a deeper push into the 1.36/1.38 congestion zone seems likely. Support is 1.3620.”