CAD little changed near 1.37 - Scotiabank

USD/CAD is little changed on the day and while the Canadian Dollar (CAD) is a relative underperformer on the session, USD traction above 1.37 is showing signs of weakening, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD push higher falters

"Spot remains above our fair value estimate (steady at 1.3630 today) which may help constrain USD strength to some degree. Canadian Retail Sales are forecast to rise 0.4% M/M in April , according to the consensus. Recall that preliminary April data released with the solid 0.8% rise in sales in March indicated a 0.5% rise (also Scotia's estimate). Exautos data is expected to drop 0.2% in the month, however."

"Canada announced plans to protect the domestic steel industry yesterday if US trade talks fail to progress. Federal projects will be restricted to using domestic steel and aluminium (or products from 'reliable trading partners'). Existing counter-tariffs on US steel and aluminium will adjust on July 21st 'to levels consistent with progress that has been made in the broader trading arrangement with the United States', the government said."

"Short-term price trends suggest USD gains this week have topped out via a 'shooting star' signal on the daily candle chart, coinciding with the mid-1.37 area that was USD support last month. The USD still looks set to close out the week on a firm technical note, however, which may see spot retain a somewhat firmer bias into next week. Broader trend dynamics remain USD-bearish which should mean relatively limited upside potential in the USD. USD losses will pick up momentum again below 1.3635 support."