The Canadian Dollar (CAD) is trading little changed on the day, with spot ignoring the sharp drop in crude prices—rather surprisingly, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
USD/CAD holds range despite slump in crude oil
“Perhaps markets feel a lot of bad news is already priced in to the CAD at this point. At the very least, the plunge in WTI is perhaps preventing the CAD from participating in the broader rebound seen in most of the major currencies since the dollar’s overnight peak. Speaking Friday afternoon, Governor Macklem downplayed the likely impact of the government’s immigration reforms on the economy.”
“Macklem said the plans would have a modest effect on growth while the impact on inflation would be limited. The governor noted that there was uncertainty about how quickly changes would play out and that the bank would take more account of the changes when it “gains more confidence in exactly what’s going to happen”.
“Spot edged to a minor new high for this move up in overnight trade but gains stalled and some modest slippage in the USD into our session may solidify the top on the USD in the low 1.39 area in the short run at least. A retest of the recent peak at 1.3945/50 remains a risk but there are still signs on the charts indicating that the USD rally is very stretched here. Key support is 1.3840 ahead of 1.3750.”
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