CAD lags peers on softer crude oil but look undervalued - Scotiabank

The Canadian Dollar (CAD) is little changed on the session. While crude prices are a little softer, the risk mood is constructive and our equilibrium estimate for the CAD has firmed a little to 1.3666 on the day, leaving the CAD about as undervalued now as it was in March, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

CAD is little changed on the day

That should, at the very least, mean little immediate risk of the USD extending gains beyond the recent peaks. The BoC considered keeping monetary policy unchanged amid 'stronger than expected' household consumption at its September policy decision the summary of the Bank's policy deliberations released yesterday revealed."

"But policymakers ultimately opted to cut amid broader economic softness and signs that upward pressure on core inflation was easing. BoC DG Mendes will speak on underlying inflation this afternoon. Prepared comments will hit the wires at 13.25ET."

"Spot is consolidating yesterday's nudge higher and holding within yesterday's range at this point. Yesterday's USD high effectively represents a retest of resistance formed by the top/reversal pattern formed over the turn of the week. This should set 1.3960 as firm, near-term resistance. The USD has found steady support overnight around 1.3935; losses through there may see spot test key short -term support at 1.3880."