CAD little changed on the day - Scotiabank

Tariff baggage kept the CAD from taking fuller advantage of a positive employment report Friday. Even if most of the gains were part-time, full-time job gains were still very decent and hours worked ended Q2 on a firm note, a positive signal for growth, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret note.

Focus on CPI data Wednesday

"With core inflation (Wednesday) expected to reflect still sticky core prices, the data reinforce the idea that the BoC is likely to remain sidelined for some time. Still, President Trump's threat of 35% tariffs on Canada commands attention and will redouble Canadian efforts to get an agreement over the line, even if the justification in the president's letter last week (drugs, the trade deficit and dairy quotas) remain flimsy."

"The USD remains marginally overvalued versus our equilibrium estimate (1.3580) which may help constrain near-term USD strength. The CAD's technical condition is little changed in broad terms. The primary trend remains bearish, but daily trend momentum has softened, spot is probing trend channel resistance at 1.3735/40, and the USD closed out last week on a technically bullish note."

"The USD may still have a tough time rallying significantly, however. Bullish weekly signals in June failed to lift the USD materially and the weekly trend strength oscillator remains bearish. Resistance in the mid-1.37s looks solid, and firmer still at 1.38. Support is 1.3650 and 1.3530/60."