Canadian Dollar (CAD) Analysis by Scotiabank’s Chief FX Strategist
The Canadian Dollar (CAD) is currently hovering around the upper 1.35 area, showing signs of stability in today’s trading. According to Shaun Osborne, Chief FX Strategist at Scotiabank, the CAD is experiencing a familiar range, making it challenging to break away from its current levels.
Technical Analysis: USD-Bearish Outlook
- Extended periods of narrow range trading may lead to more dynamic movements in the future.
- Current spot rate is close to estimated equilibrium at 1.3548.
- Recent data suggests that Canadian Retail Sales are expected to rise by 0.6% in July, with ex-auto sales increasing by 0.3%.
Osborne notes that retail activity was weak in June, but volume sales showed a marginal increase. Statcan’s ‘flash’ estimate for July sales indicated a potential 0.6% rise.
On the technical side, the USD closed weakly on Thursday, forming a large, bearish outside range signal on the daily chart. This signals a near-term downside risk for the USD, reinforcing resistance in the mid-1.36 zone. Any minor gains for the USD today are likely to be consolidative before a potential downturn. A breach of short-term support at 1.3535/45 could further weaken the USD.
Analysis and Implications
The analysis provided by Scotiabank’s Chief FX Strategist offers valuable insights into the current state of the Canadian Dollar and the potential impact on trading activities. Key takeaways from this analysis include:
- The CAD is currently stable but facing challenges in breaking away from its current range.
- Expectations of a rise in Canadian Retail Sales in July may influence market sentiment towards the CAD.
- The technical outlook suggests a bearish sentiment towards the USD, with potential downside risks in the near term.
Overall, this analysis highlights the importance of monitoring key economic indicators and technical signals to make informed decisions in the foreign exchange market. Traders and investors should pay attention to developments in the CAD and USD to capitalize on potential trading opportunities.