USD losses may resume below 1.3450/55 – Scotiabank

The CAD is trading marginally higher on the session, reflecting the bid for risk assets on the day, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD holds marginal gain ahead of June and Q2 GDP

“Narrower US/Canada short-term spreads continue to provide some broader backing for the CAD, although gains are still running a little ahead of fair value (1.3522) which may limit scope for additional CAD strength.”

“Canadian GDP is expected to advance marginally in June (0.1%) and hold up relatively well on the quarter; the consensus call anticipates growth of 1.8% (SAAR) for Q2, a little ahead of Q1’s 1.7%. Some GDP-tracking models indicate growth may be a little better than the consensus (2% or so).”

“Spot remains in consolidation mode—off the lows from earlier in the week but not really showing any major signs of reversing recent losses. Overnight price action suggests some minor softness in the USD developing from the 1.3490 area tested overnight. Price action since Tuesday implies a potential bear flag in development which means that USD losses may resume below the bear flag base at 1.3450/55.”