Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) is little changed, with USD/CAD stretching its recent range but failing to sustain moves above the mid‑1.37s. They stress CAD remains below estimated fair value near 1.3400, supported by Oil and terms of trade, while Bank of Canada (BoC) policy is in a wait‑and‑see stance.

CAD holds firm below fair value

"The CAD is little changed on the session and while the USD continues to stretch the recent trading range, gains through the mid-1.37 area remain marginal and short-lived."

"The CAD is one of the better-performing major currencies on the session and spot remains significantly overvalued relative to our equilibrium assessment (1.3402 currently)."

"Oil prices and terms of trade are doing the heavy lifting here but narrower spreads are also a factor as markets mull BoC tightening risks."

"Last week, the Bank left the policy rate on hold and suggested it was adopting a “wait and see” approach to the situation in the Gulf. "

"There is little change in the CAD’s technical condition. The USD remains firm near the mid-1.37 area but USD gains are attracting better selling interest at the extremes and we still rather think the mid-1.37 zone represents a rough (considering overall market volatility) zone of resistance. Support is 1.3690/00. "

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