CAD edges marginally higher on latest twist in tariff saga - Scotiabank

The Canadian Dollar (CAD) has picked up--marginally--on the back of the latest twist in the tariff saga but the gains are minimal relative to yesterday's close. Oddly, the CAD did weaken in response to the announcement of the court decision late yesterday to reach the mid/upper 1.38s, likely reflecting the broader pull of the USD rising against the likes of the EUR and GBP in response to the news, Scotiabank's Chief FX Strategist Shaun Osborne notes.

Daily and weekly oscillators remain bearishly aligned

"Still, relief for Canada from the court ruling may be limited. It's unclear how promptly the administration will respond to the ruling, the appeal process will play out--probably not that quickly--and businesses may wonder when, or how, they will get refunds on tariffs already paid out under the now banned measures."

"Despite the volatility, spot is still trading a little below estimated fair value (1.3881) and we still feel that USD gains towards 1.39 offers decent value for USD sellers. Despite short-term volatility, price action may be signaling a halt to the USD rebound that developed after Friday's recovery from the upper 1.36s."

"Intraday trends in the USD look soft and drift from the overnight high is pressuring minor support at 1.3820; a move below here may see the USD edge back to the 1.3750/75 area. Overhead resistance looks firm near 1.3880/1.39, with trend resistance and the 40-day MA settling near the 1.39 point on the daily chart. Daily and weekly trend strength oscillators remain bearishly aligned for the USD which should limit scope for gains."