The Canadian Dollar (CAD) is little changed on the session. In line with expectations CPI data, reflecting a marginal easing in core pressures, does no move the needle for the BoC policy outlook in the short run, Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret report.
“The rebound in core price trends since the turn of the year remains intact and there is more than enough uncertainty around the outlook to keep the Bank on hold for now. Swaps reflect little change in easing expectations, with around 8bps of cuts priced in for the end of July. Spot continues to trade above our estimated fair value (1.3649 today) but the deviation is narrowing as global risk sentiment settles.”
“Spot’s (technically bearish) rejection of the 1.38 area at the start of the week has been offset to some extent by the rebound yesterday’s test of support in the upper 1.36s. Spot may continue to pivot around the low/mid 1.37s in the short run but the early week failure just under 1.38 remains the salient feature of the short-term chart because the turn lower came in time to prevent a positive change in broader technical momentum on the daily study and keep the overall outlook for the USD bearish.”
“A break under 1.3675 support is needed to renew downside pressure on the USD at this point, however.”
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