The Canadian Dollar (CAD) is steady and rangebound, supported by bond market dynamics but capped by softer energy prices and equity volatility. USD/CAD trades slightly below fair value, with resistance near 1.38 and support in the low 1.37s keeping price action contained, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USMCA comments limit USD upside

"The CAD is little changed on the session and remains generally rangebound. Trends in cash bond and swap spreads remain CAD-supportive but equity market volatility and softer energy prices are moderate headwinds for the CAD. The CAD’s fair value estimate has slipped a little as a result (1.3805 this morning), leaving the USD still trading at a slight discount to its estimated equilibrium."

"That may restrain the CAD somewhat and help sustain range trading for now. Bloomberg reported late yesterday that USTR Greer had indicated to US lawmakers in a briefing that he supports the US remaining in the USMCA but the president will keep his options open."

"The CAD has slipped into a sideways range trade after the early week drop to the low 1.37 area. The ceiling on funds looks fairly solid at 1.3790/00. A push above here may see the USD rebound extend to the mid/upper 1.38s. Support is 1.3725/30."