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According to FX Strategists at Scotiabank, the pair could attempt a test of 1.3000 and above in the short-term horizon.

Key Quotes

“Broader developments are dominating in the absence of high-level domestic events and releases, and NAFTA headline risk remains elevated as market participants assess the latest comments from U.S. Trade Representative Lighthizer. U.S.-Canada yield spreads remain elevated above 60bpts and CAD continues to trade well above our FV estimate (1.3282) incorporating both spreads and Canada’s terms of trade index. Domestic risk returns with Thursday’s speech from BoC Gov. Poloz and Friday’s monthly GDP for July”.

USDCAD has been quietly fading its recent decline. Bearish momentum indicators have softened and bearish trend strength indicators have moderated. USDCAD appears to be struggling to extend its modest gains through 1.2950 however we remain bullish targeting a push through 1.3000 toward the 50 and 100 day MA’s at 1.3050. We look to near-term support between 1.2920 and 1.2900″.