CAD lags peers but may be due a modest catch up - Scotiabank

The Canadian Dollar (CAD) has taken advantage of the generally weaker US Dollar (USD) tone this morning but it is doing its usual thing of lagging most of its major currency peers on the day, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Some catch up in the CAD looks overdue

"Canadian Manufacturing Sales and Wholesale Sales are expected to rise 0.1% M/M and 0.7% M/M respectively (the latter in line with the preliminary data released with May's slim, 0.1% gain). Markets have generally overlooked somewhat better than expected Canadian data releases in recent weeks in outright terms and relative to the US data surprises."

"Some--modest--catch up in the CAD looks overdue, particularly as factors influencing the CAD are driving our fair value estimate back to 1.3655 today."

"USD/CAD's drift back from its peak in the low 1.38s yesterday is not all that persuasive from a technical point of view--the USD could be staking out a minor consolidation ahead of renewed gains--but USD losses do reinforce the idea of fairly stiff short-term resistance in the 1.3800/20 range following last week's sharp fall in the USD from the 1.3880 area. USDCAD support is 1.3740/50 and 1.3720."