The Canadian Dollar (CAD) is soft, down 0.2% against the US Dollar (USD) and outperforming all of the G10 currencies as we head into Monday’s NA session, Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret report.
Focus on BoC Wednesday
“The highlight for this week will be the dual Fed/BoC decision day on Wednesday. For the BoC, markets are looking for a widely expected hold at 2.75%. The BoC has maintained a marginally dovish bias, owing to ongoing concerns related to trade and global growth.”
“These concerns have been balanced against the persistence of underlying inflation and signs of broader resilience in the domestic economy with notable strength in Canada’s June employment report. This week’s meeting also includes a Monetary Policy Report and forecast update. The lack of any progress on US/Canada trade talks should allow the BoC to maintain a cautiously dovish bias.”
“USD/CAD has traded in a flat consolidation range since early June, with support observed below 1.3600 and resistance seen above 1.3750. The RSI is at 50, reflecting a clear lack of momentum and confirming the neutral trend. We note that USD/CAD’s latest gains are delivering a break above the 50 day MA (1.3697) and risking an extension higher. For now, we look to near-term support below 1.3680 and resistance above 1.3780.”