The Canadian Dollar (CAD) is little changed on the session but a flat performance versus the US Dollar (USD) means it is sustaining gains through the 1.40 level for the first time in 10 or so days, Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret report.
CAD is firmer but it is hardly storming higher on the charts
“PM Carney made an unusual early evening address to the country last night to outline—effectively ‘sell’—the government’s (very broad) fiscal plans amid worries that the minority government is at risk of triggering another election if parliament fails to support the budget in early November. The government aims to “spend less and invest more”, target talented foreign workers and focus on developing Canada’s resource sector to counterbalance the challenges represented by the evolving trading relationship with the US.”
“Meanwhile, Canadian Retail Sales are expected to rise 1.0% in August, rebounding from the weak 0.8% drop in headline sales seen in July. A 1% gain would match the preliminary data for August reported with the July update. Canadian data surprises have turned a little more positive over the recent past but signaling from BoC Governor Macklem suggests a 1/4-point cut in the policy rate is likely next week. Note that swaps pricing strongly suggests that—with policy in the neutral zone—this may be the last cut in the current cycle.”
“That CAD is firmer but it is hardly storming higher on the charts. Short-term price action suggests the 1.4005/10 area is developing into minor resistance for spot following the USD’s drift lower from Tuesday’s high. Holding below the low 1.40 zone puts a little pressure on a cluster of USD supports in the upper 1.39 area (200-day MA at 1.3961) which will determine whether the CAD rebound can extend in the short run or not.”
