CAD holds trading range - Scotiabank

April has been good for the Canadian Dollar (CAD) (it's strongest month against the US Dollar (USD) since 2019) but spot continues to range trade, Scotiabank's Chief FX Strategist Shaun Osborne notes.

FV estimate slips under 1.38

"The election has been inconsequential for the CAD so far but now the hard work for the Carney government has started. There may be no rush to engage with the US on trade; developing US economic headwinds from President Trump's tariff policies suggest that patience may be the best strategy for now. Factors driving the exchange rate continue to edge in the CAD's favour."

"Our fair value estimate for spot has nudged under 1.38 this week for the first time since last October and sits at 1.3789 today. The generally soft USD and calmer US asset markets are factors but lower US yields and narrower US/Canada spreads since early March are a boost for the CAD. Canada repots February industry-level GDP. Growth is expected to be flat in the month, reflecting tariff uncertainty, and slower at 1.7% for the year."

"Spot's consolidation is extending on the short-term charts. Congestion between 1.3575/1.3775 continues to offer some support to the USD but the broader USD downtrend remains intact and bearish trend momentum will curb USD rebounds in the near-term. Intraday resistance is 1.3880, with strong resistance likely nearer 1.40. Support is 1.3775/80 and (key) 1.3745."