CAD gives up mild gain led by steady BoC - Scotiabank

The Bank of Canada leaving policy on hold on Wednesday provided a minor boost for the Canadian Dollar (CAD) but the pair has nudged a little higher again this morning, reflecting minor gains in the US Dollar (USD), leaving funds trading more or less bang on our fair value estimate (1.3881), Scotiabank's Chief FX Strategist Shaun Osborne notes.

Trend momentum still leans USD-bearish

"Some short-covering demand may give the USD a mild lift in the short run as markets square up positioning into the long weekend."

"The risk of further BoC policy easing steps is unlikely to recede too far in the coming months but policymakers will need more clarity on the tariff regime facing Canada before acting. Ontario is introducing legislation that will remove provincial trade barriers (so long as other jurisdictions reciprocate). Never let a good crisis go to waste."

"Mild gains for the USD today following a drop in spot yesterday keep the short-term technical picture somewhat neutral for spot. Broader patterns and trend momentum still lean USD-bearish and will keep the lid on any USD gains (to the 1.4000/25 area at most). Support is 1.3825/50."