CAD steady versus USD - Scotiabank

The Canadian Dollar (CAD) is steady, losing only marginal ground against the US Dollar (USD) on the session, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret note.

CAD still trades shy of fair value

"Trade uncertainty remains a drag on the CAD from a short run point of view after the volatility around the DST issue but hope remains that an agreement with the US, or at least the framework of one, can be reached by July 21st. Risk appetite is positive, commodities/terms of trade are a little firmer again after slumping around the oil price drop in late June but firmer US rates have nudged spreads out modestly in the USD's favour since yesterday's low for US bond yields."

"Factors driving the CAD are mixed, in other words, but spot continues to trade a little shy of our fair value estimate (1.3561 today), suggesting a moderate downside bias for spot and limited (all else equal) upside potential for the USD in the short run. We continue to favour fading moderate USD gains. The technical breakdown in USD/CAD that appeared to be underway late last week stalled amid the volatility in the USD Friday afternoon."

"The broader downtrend in the USD remains intact, however, better selling pressure is clearly developing around even moderate intraday gains in the USD at the moment. Solid resistance sits above the market now at 1.3700/05. Support is 1.3590/1.3610. A drop in the USD below here should see spot take another run at 1.3545/50 ahead a push to the 1.3400/20 area."