Title: Canadian Dollar (CAD) Vulnerable to Global Stock Weakness: Expert Analysis
The Canadian Dollar (CAD) faced significant pressure from global stock market fluctuations yesterday, dropping below 1.39 in Asian trade before rebounding slightly during North American trading hours, according to Scotiabank’s FX strategist Shaun Osborne.
Osborne highlights that a break below the 1.3790 level could signal a positive turn for the CAD, despite the impact of weak stock performance and commodity prices. The current valuation of the CAD suggests limited potential for further USD gains in the short term, based on fair value models.
Analyzing the recent price action, Osborne suggests that the USD’s rally above 1.39, followed by a lower close, may indicate a significant technical shift in the USD/CAD exchange rate. The USD’s overextended upward movement was already showing signs of weakness, and yesterday’s market behavior could be indicative of a ‘blowoff top’ scenario.
Looking ahead, the key support level to watch is at 1.3790. A breach below this level could provide the CAD with additional support and potentially lead to a reversal in the currency pair’s fortunes.
In summary, the recent market dynamics suggest that the Canadian Dollar is currently vulnerable to global stock market movements, with potential for a positive turnaround if key support levels are breached. Traders and investors should closely monitor the 1.3790 level for potential trading opportunities in the USD/CAD pair.