USD/CAD got caught in the crossfire of the hefty US Dollar (USD) advance against the European currencies earlier, rising quickly from the mid/upper 1.39s to an intraday high near 1.4020. The CAD was, however, able to add to this week’s gain on the EUR to test 1.45 (taking losses for EUR/CAD for the week to 2.7% from Monday’s peak), Scotiabank’s Chief FX Strategist Shaun Osborne notes.
EUR/CAD plunge extends to 1.45
“While the CAD is one of the better performers on the day so far among the G10 pairs, it remains susceptible to broader USD strength. Retail Sales are expected to rise 0.4% in September, in line with the flash estimate released with August’s 0.4% M/M increase. Note Scotia is a bit above consensus at 0.5% M/M.”
“The Federal government announced a temporary sales tax holiday and one-time rebate for most Canadian households yesterday to prop up its support in parliament and among unenthusiastic voters. The breaks will provide a very marginal boost to consumption.”
“USD gains from the mid-1.39 support zone have stalled around 1.4015/20 minor resistance (Wednesday’s high). The rebound in price from yesterday's low is sufficient to signal a short-term low is in for funds at least, I think. The USD may consolidate around 1.40 ahead of the weekend but topside risks are building again and a push above 1.4020 in the next few sessions should prompt a further rise to retest the recent peaks around 1.41.”
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