USD/CAD: Soft risk appetite forces a range trade - Scotiabank

The Canadian Dollar (CAD) is modestly softer on the session amid weak risk appetite but it is at least holding recent ranges, Scotiabank's Chief FX Strategist Shaun Osborne notes.   

CAD pinned back in range

"My fair value model is unchanged at 1.3931 today which may herald a minor reprieve for the CAD, especially if we do see a broader pullback in the USD develop. Scope for CAD gains is, however, fundamentally quite limited in the short run. Industry-level GDP is expected to come in flat for August, in line with the flash estimate released with the July data (+0.2% M/M)."

"Sluggish growth should already be factored into the CAD at this point so an on expectations outcome may not have too much impact on spot. Still, the contrast between Canadian and US growth momentum will underscore the cyclical headwinds which will limit scope for CAD gains now."

"There is no obvious relenting in the USD uptrend and spot got pretty close to a retest of the August peak (1.3947) yesterday before drifting back. Another potential inside range signal is developing on the daily chart today, however, and the USD rise remains very, very stretched, according to the daily studies. Resistance remains 1.3945/50. Support is 1.3890/95."