The Canadian Dollar (CAD) has picked up a little support against the generally softer USD overnight after losses steadied just below 1.3850 yesterday, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

CAD lags peers ahead of Canadian employment data

'The CAD is lagging its major currency peers on the session, however, with the smallest net gain on the big dollar among the major currencies. The CAD continues to trade well below its estimated fair value (1.3643) despite positive risk appetite and slightly narrower US/Canada spreads.'

"Some catch up seems appropriate, but markets will have to negotiate this morning’s data round before that can happen. The consensus estimate for Canadian employment is a modest 5K rise and a small increase in the unemployment rate to 7.0% in August. Scotia is at the top of the estimates for Canadian jobs with its call for a 35k gain, however. Wage growth is forecast to ease slightly but remain relatively buoyant at 3.4% Y/Y."

"A softer USD has pushed USD/CAD back to the lower end of the short-term bull channel that has guided the market higher over the past week but the CAD has a bit more work to do in order to secure a bit more positive technical momentum. A clearer break under channel support at 1.3790/95 might do that and put the CAD on course to retest the mid-1.35s. Resistance is 1.3855/60 intraday."