Scotiabank strategists cite stabilizing spreads and improved Canadian data as support for the Canadian Dollar’s near-term outlook.
The Canadian Dollar (CAD) remains flat on Thursday but has edged higher against the US Dollar (USD) this week, positioning it as a modest outperformer. Scotiabank strategists note that much of the negative sentiment toward CAD appears already priced in, with short-term USD/CAD risk reversals reflecting a broader shift away from the USD.
Recent Canadian economic data, though still soft, has slightly outperformed expectations, narrowing the US-Canada economic surprise gap from early June highs. Front-end spreads have stabilized, further supporting a more constructive view of CAD in the near term. The USD remains overbought, with resistance near the 1.4250 level.
A break below 1.4150 support would signal potential bearish momentum for USD/CAD, according to the strategists. The technical outlook for CAD remains neutral, with little room for additional losses at current levels.