A breach of the 1.3725/50 is imminent – Scotiabank

The Canadian Dollar (CAD) is barely changed at all on the session, Scotiabank’s chief FX strategist Shaun Osborne notes.

Bulls may try to break above 1.3725/50

“Spot gains edged back above the 1.3725 area briefly—a couple of times—yesterday and remains close to that point this morning but the flat-ish range trade in place over the past week remains more or less intact. The USD is trading above my estimated fair value (1.3668 today) still but factors have turned marginally less CAD-supportive relative to earlier in the week.”

“Weaker crude prices and softer terms of trade may be mild CAD headwinds in the short run. Canada reports Manufacturing Sales, Housing Starts and International Securities Transaction data this morning. Preliminary Manufacturing Sales data for June, released with the May data, indicated a sharp, 2.6% m/m drop in sales in the month.”

“The USD sell-off has stalled but signs of a reversal are—so far—absent. The CAD’s failure to exploit the push under 1.3725 USD support this week might be disappointing from the CAD-bullish perspective but spot may simply be consolidating recent losses and the salient feature of the charts remains the huge, weekly bear signal that developed around last week’s turn lower. The broader outlook remains USD-negative. Support is 1.3675. Resistance remains 1.3725/50.”