The CAD is a little firmer on the session - Scotiabank

Tariff concerns are keeping the Canadian Dollar (CAD) on the defensive and the US Dollar (USD) trading well above its estimated fair value, according to our measure, at least, Scotiabank's Chief FX Strategist Shaun Osborne notes. 

CAD gains modestly but trades well below estimated FV

"USD/CAD's estimated equilibrium has eased to around 1.41 (1.4103 today) over the past few days, reflecting some narrowing in US/Canada spreads. Markets are fully priced for a BoC rate cut this week but US 2Y yields have fallen some 45bps over the past month as US slowdown concerns have mounted around tariff uncertainties and DOGE-inspired austerity." 

"The USD still looks overvalued relative to the tariff regime that is in place at the moment and that should--at the very least--limit USD/CAD's ability to push higher." 

"USD/CAD is marginally softer on the session after peaking near 1.4475 in late trade yesterday (now resistance). Spot formed a bearish 'shooting star' candle on the 6-hour chart around that move and the subsequent losses in the USD 'confirm' the bearish turn. USD weakness may extend to 1.4355/60 in the short run."