The Canadian Dollar (CAD) is trading a bit off its overnight peak around 1.3575 but retains a generally firm undertone. The pro-risk mood might be extending CAD sentiment a little support, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
More USD/CAD weakness ahead
“A likelier explanation for CAD gains is that we may be seeing the impact of the record net CAD short positions reflected in the recent CFTC data feeling increasingly uncomfortable with CAD strength. Net short CAD activity picked up sharply through mid-year, reflecting weaker cyclical dynamics and the BoC’s relatively early start to the easing cycle.”
“Like previous (though less significant) ramp ups in net selling of the CAD (in April and November last year), the latest CAD slide stopped around 1.39 and now, the CAD’s three week advance from that low may be squeezing weaker CAD short hands and giving the CAD a short-covering lift. Spot losses have extended marginally below 1.3595 to reach a four-month low for the USD.”
“Trend strength signals are aligned bearishly for USD/CAD on the intraday and daily DMI oscillators while the weekly study is close to flipping bearish. Losses below 1.3590/95 (200-day MA and range lows from May and July) are marginal but suggest more USD/CAD weakness ahead. Support is 1.3560 (50% retracement of the 2024 USD rally) and 1.3475 (retracement and major trend). Resistance is 1.3625/50.”
Source: https://www.fxstreet.com/news/usd-cad-may-try-to-test-the-13475-support-scotiabank-202408221135