CAD underperforms as spreads widen, crude softens - Scotiabank

The Canadian Dollar (CAD) is a mild underperformer on the session. Factors have shifted a little against the CAD so far this week, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD has nudged steadily higher

"Crude prices are lower on concerns that OPEC+ might boost supply and short-term US/Canada spreads have widened somewhat from last week's low, although the broader trend in narrowing remains intact. Stock market volatility could be another headwind for the CAD in the near-term though we generally feel that short-term USD gains are a fade while risks remain tilted towards near-term Fed policy easing."

"Our estimated fair value for USD/CAD has edged a little higher to 1.3622 today after ending last week just below the figure. The biggest risk for the CAD (and other currencies generally) this week is a stronger than expected NFP number Friday which diminishes the prospect of the FOMC cutting rates later this month."

"The USD has nudged steadily higher from last week's push to the low 1.37 range but gains towards 1.38 and a little above are still attracting USD selling interest, the charts would suggest. Intraday resistance at 1.3815 still looks quite firm. A push through the low 1.38s could prompt additional gains to the upper 1.38 zone. Support is 1.3765/70 and 1.3725/30."