The Canadian Dollar (CAD) is little changed in quiet trade. Weak Asian stocks and soft European markets reflect a somewhat cautious undertone to risk sentiment, despite some gains in US equity futures, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Charts lean USD-bullish

"The weaker undertone of the AUD and NZD on the session may also be dragging on the CAD a little. More generally, the rebound in US yields this week and the widening in short-term US/Canada spreads accounts for much of the soggy tone in the CAD. Our FV estimate for the CAD has drifted out to 1.3890 (from the low 1.38s mid-week)."

"There is no way to sugarcoat the technical outlook for the CAD after the mid-week rebound in funds, the intraday, daily and weekly charts are all leaning USD-bullish. There is a likely bull 'hammer' candle pattern developing on the weekly chart, the daily chart reflects a solid 'morning star' candle reversal around Wednesday’s low (and the bounce back above the 200-day MA) and the intraday chart suggests strongly that USD gains through the 1.4020/25 area could propel the USD to new, short-term highs above 1.41."

"Recall that the short-term inverse Head & Shoulders pattern noted yesterday targeted a move to the 1.4025 point. Intraday support is 1.3975 and 1.3890/00."