CAD holds narrow range around 1.44 – Scotiabank

The Canadian Dollar (CAD) is little changed on the session. The immediate focus for local markets is on tomorrow’s labour market update but the data perhaps won’t add too much to short-term FX dynamics, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD little changed on the day

“Markets are 80% priced for a rate cut at the end of the month. Wide spreads remain a headwind for the CAD and account for much of its weak valuation versus the USD, despite tariff risks. Spot is trading close to its estimated equilibrium of 1.4334 currently. Clarity on the domestic political front is unlikely for some time.”

“Even if an election were to be called now, rules would prevent a vote happening until mid-February at the earliest. A late spring vote might suit the opposition parties who can hold the government’s feet to the fire in the meantime and make a big deal of the power vacuum when the election finally comes.”

“Spot is back to pivoting aimlessly around the 1.44 point in the short run. The failed downside breakout below 1.4335 is a negative for the CAD but the hefty drop in the USD at the start of the week remains a minor blot on the technical landscape still. The USD will need to overcome 1.4465 resistance to regain the technical initiative and make a run for 1.47. Support is 1.4335 (minor) and 1.4280.”