CAD Stays Resilient Near Fair Value Amid Volatile US Dollar
According to Scotiabank strategists Shaun Osborne and Eric Theoret, the Canadian Dollar (CAD) is currently trading near its fair value against the US Dollar. Despite volatile Federal Reserve expectations and trade uncertainty, the CAD has shown resilience, but its upside is capped by a wide rate gap.
The USD/CAD exchange rate has been trading around 1.3920, Scotiabank's fundamental equilibrium estimate. This reflects wider front-end US/Canada swap spreads in the main. The strategists note that the Canadian Dollar's performance is impressive, with limited downside potential currently.
Looking ahead to this week's events, attention turns to a steady Bank of Canada decision on Wednesday and a moderate jobs gain expected on Friday. The USD may correct slightly in the short run, but not too much, given still USD-bearish trend oscillators.