CAD holds range below USD resistance in the low 1.38s – Scotiabank

The Canadian Dollar (CAD) is little changed in quiet trade as markets await US data, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD/CAD to trade at 1.34 in the end of the year

"The CAD remains a slave to external influences to a large extent at present. Factors driving the CAD have deteriorated a little (our fair value estimate for spot has edged up to 1.3685 today, from 1.3665 Monday) but the firm tone of the USD is helping sustain the CAD’s undervaluation. The Bank of Canada’s Q2 survey of market participants reflected a consensus expectation of two 25bps cuts from the Bank over the balance of this year and a slightly firmer CAD (1.35) by year end."

"Scotia continues to feel the Bank can sit on its hands for an extended period, however, and swaps reflect only one rate cut priced in for the rest of this year. Our year-end call for USD/CAD remains 1.34. Canada releases Building Permits for June at 8.30ET.

"Spot is firmer but remains with the confines of the past week’s range. Underlying trend momentum is aligning bullishly across the shorter-term studies, however, which extends the USD little more support as spot nears resistance at 1.3810/30. The USD has some work to do to clear resistance in the low 1.38s but a sustained push higher could retest major resistance at in the upper 1.38s. Support is 1.3720/30."