The Canadian Dollar (CAD) is holding a minor gain against the mixed USD to start the week, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
USD’s latest extension higher has stalled
"Better-than-expected Canadian employment data for October Friday helped lift the CAD mood a little even though details were mixed beyond the headline gain of 66.6k jobs (unemployment down, 'hot' wages versus part-time work leading gains and hours worked remaining soft)."
"Still, the data is good enough to endorse the steady policy outlook for the BoC for the foreseeable future and provide the CAD with a boost via 2Y swap spreads narrowing some 10bps through late week trading. Narrower rate differentials are helping pull our fair value estimate for funds down to 1.3872."
"Technical pointers on the daily USD/CAD chart suggest the USD’s latest extension higher has stalled close to the 1.4150/60 target (and firm resistance) we have noted in recent reports. USD losses through 1.4080 and 1.4040 support plus some weakening in the USD’s (still bullish) underlying trend momentum may drive a little more drift. There is minor ('big figure') psychological underpinning for the USD at 1.4000 but a broad zone of support (1.3890/1.3925), below which losses should extend more significantly, remains some distance away."
