CAD Traders Eye Mid-to-Upper 1.39s Amid Ongoing Trade Uncertainty
Scotiabank strategists Shaun Osborne and Eric Theoret argue that the Canadian Dollar (CAD) is trading near its fair value against the US Dollar, specifically around 1.3842.
The CAD has been volatile since Friday due to trade headlines and weaker Oil prices, but Osborne and Theoret believe that downside pressure on the currency may remain contained absent a major trade shock.
They note that Canada's tariff response won't take effect until early September, while the US threat of 50% tariffs on all autos, auto parts, and steel won't land until January, creating a built-in cooling off period in both cases.
The strategists also point out that front-end spreads are little changed on the session and the risk backdrop is positive, with spot trading right about where their fair value estimate says it should be.