Scotiabank strategists cite firm crude prices and narrower front-end spreads as key drivers for the Canadian dollar’s resilience.
The Canadian dollar (CAD) remains resilient against the US dollar (USD), trading near 1.3870 as fundamentals support further gains. Scotiabank strategists highlight a strong bearish trend in USD/CAD, with downside risks targeting the 1.35–1.37 range after breaking below key technical levels like the 200-day moving average at 1.3848.
CAD strength is underpinned by narrower front-end spreads and firmer crude prices, offsetting softer global equities and a mild USD rebound. The bank’s fair value estimate for USD/CAD has slipped to 1.3843, reflecting improved CAD fundamentals. Investors appear unfazed by looming US tariff deadlines, which could impose 50% duties on select Canadian exports, though negotiations remain stalled on automotive trade.
Technical analysis suggests selling interest near 1.39, with the broader trend favoring further CAD appreciation. The currency is marginally outperforming within the G10 group, trading close to its estimated equilibrium despite external headwinds.