USD/CAD: May see a marginal technical improvement - Scotiabank

The Canadian Dollar (CAD) is marginally higher on the day so far. Slightly firmer risk appetite and a small rebound in crude oil prices are helping at the margin but, absent some real improvement in spreads, which are the drain on the CAD's performance at the moment, there is little chance of the CAD picking up much ground in the short run, Scotiabank's Chief FX Strategist Shaun Osborne notes.

USD remains heavily overbought

"USD/CAD fair value is estimated at 1.3932 this morning. Governor Macklem reiterated Monday that Canadian rates were heading lower but the pace, timing and scope of monetary easing was still the be determined. The Governor and Senior DG Rogers are addressing parliamentary committees today (15.30ET) and tomorrow on recent policy decisions."

"The intraday chart holds out the potential for some--minor--CAD improvement in the next day or so after spot's movement so far this week set up a minor double top (1.3905) and pushed below the low point (1.3883) between the two tests of the low 1.39s. That might mean USDCAD pushing back to the 1.3860 area."

"The USD remains heavily overbought so even minor losses warrant attention as they could tip the balance in favour of a deeper correction in the USD's recent gains."