National Bank of Canada (NBC) analysts discuss the Canadian Dollar, noting that USD/CAD remains range-bound and sensitive to upcoming Canadian and US data releases. They highlight how recent moves have been driven by shifting expectations for Bank of Canada and Federal Reserve policy. The report emphasizes that near-term direction for USD/CAD will depend on incoming economic indicators and evolving rate-cut expectations.

Canadian Dollar driven by data risks

"We continue to expect USDCAD to trade within a relatively well-defined range in the near term, with the pair responding primarily to incoming data and shifts in relative monetary policy expectations."

"While recent Canadian data have been somewhat softer than expected, we do not yet see sufficient evidence to materially alter our medium-term view for the Canadian Dollar, though we acknowledge that risks are tilted to the downside if domestic growth disappoints further."

"If US data were to surprise significantly on the upside and markets were to push back expectations for Federal Reserve easing, USDCAD could test the upper end of its recent range, whereas a string of weaker US releases would likely see the pair gravitate back toward the lower end."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)