CAD slippage softens near-term prospects on the charts - Scotiabank

The Canadian Dollar (CAD) is modestly weaker on the session but losses may be moderating above 1.37 for now, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD/CAD gains may extend to 1.3775/1.3825

"The USD continues to trade above estimated fair value (1.3630). Communications from the BoC this week clearly highlight policymakers' concerns about sticky inflation and the lack of visibility around the outlook for prices amid uncertainty over tariffs. The summary of the policy meeting on June 4th noted that it was harder to ease policy while core inflation remained firm."

"Governor Macklem reiterated that position in comments yesterday when he suggested that underlying price pressures may be "firmer than we thought". Like the Fed, the BoC appears in no hurry to cut rates-- even as the domestic labour market is showing signs of slowing. USD gains extended through the low 1.37s overnight, putting a potentially more positive spin on the near-term technical outlook for the USD."

"Intraday charts show USD gains moderating ahead of resistance at 1.3745/50-- key support on the way down--but this week's break above short-term resistance in the mid 1.36s may tilt risks towards some additional gains for the USD into next week. A firm close on the week would add to near-term positive momentum. A push above 1.3750 would suggest USD gains may extend to 1.3775/1.3825. Support is 1.3690 and 1.3630."