CAD holds near low for now – Scotiabank

There is an uncomfortable mix of internal and external uncertainties facing the Canadian Dollar (CAD) right now. The charts suggest no relief for the CAD, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Uncertainties persist near term

“Perhaps the parliamentary recess will allay some of the market’s concerns, if only temporarily, as PM Trudeau tries to figure out his next move. The CAD is consolidating very close to its recent lows, however, which is hardly ever a positive sign; there is simply no-one looking to fade the slide in the CAD at this point.”

“There is a chance that the CAD picks up a little ground into the end of the year (based on seasonal trends) but investors will want to see clarity in local politics and progress on addressing president-elect Trump’s border concerns early in the new year or the CAD is liable to come under renewed pressure.”

“Spot traded to a minor new cycle high overnight and while the USD has backed off the peak, losses are marginal. The short-, medium– and long-term trend momentum oscillators are aligned bullishly for the USD which suggests only limited potential for the CAD to recover at present. Resistance remains 1.4350 but there is no discernible resistance above that point until the 1.47 area from my point of view. Support is 1.4250/75 and 1.4190/00.”