Forex
CAD Faces Pressure Near 1.40 as USD Tone Remains Firm
The Canadian Dollar (CAD) is facing pressure near the 1.40 level against the US Dollar, according to Scotiabank strategists Shaun Osborne and Eric Theoret.
This pressure reflects a firm USD tone and wider US, Canada front-end spreads, which are making it difficult for the CAD to maintain its value.
The spot rate is seen as somewhat overvalued versus fair value, with a estimated fair value of 1.3910.
The upcoming remarks from Bank of Canada Governor Macklem could reinforce inflation concerns and support expectations for tighter policy, which would provide some medium-term anchoring for the CAD.