As the Canadian Dollar (CAD) remains slightly firmer on the session, it continues to outperform its close commodity peers, according to Scotiabank’s Chief FX Strategist Shaun Osborne. While the CAD is down 0.6% on the week versus the US Dollar (USD), it is performing better than the Australian Dollar (AUD) and New Zealand Dollar (NZD), both of which are down nearly 2%.
USD Approaches Key Hurdle at 1.3845
Osborne notes that the recent range trade in the CAD is holding steady, with gains this week just surpassing the April peak of 1.3846. Despite the top of the range holding, a return towards the lower end of recent ranges is unlikely unless market conditions, such as spreads and stock performance, become more favorable for the CAD. The CAD is expected to maintain a soft tone and remain near its recent lows against the USD for the time being.
Recent movements in the USD suggest that the immediate risk of an extension higher has eased, with the CAD showing a modest gain. While the CAD may be showing signs of a modest recovery in the short term, it still has work to do to improve its technical tone.
On the technical side, a bearish outside range signal on the 6-hour chart marked yesterday’s peak, indicating potential for further improvement in the CAD if support at 1.3795 is breached. Resistance is seen at 1.3845/50.
Analysis:
The Canadian Dollar (CAD) has shown resilience against the US Dollar (USD) despite a weekly decline. The CAD is performing better than its commodity peers and is expected to maintain a soft tone in the near term. Technical indicators suggest a potential for a modest recovery in the CAD, but it still faces challenges in improving its overall tone.
For investors and traders, keeping an eye on key levels such as 1.3845/50 can provide insight into potential movements in the USD/CAD pair. Understanding these market dynamics can help individuals make informed decisions about their investments and financial strategies.