Scotiabank strategists Shaun Osborne and Eric Theoret note that the Canadian Dollar (CAD) is showing signs of consolidation after a sharp decline since early September. The USD/CAD exchange rate currently sits around 1.4269, reflecting a period of stabilization in the market. The strategists observe that price movements are closely aligned with the 2-year US-Canada interest rate spread, with oil prices providing some support to the CAD.
Their fair value estimate for USD/CAD is below the current spot rate at 1.4191. Technically, the rally from early September appears to have stalled in the mid-to-upper 1.42 range. The Relative Strength Index (RSI) has moderated from extremely overbought levels, now hovering around 70 after peaking near 80. Key resistance levels are identified at 1.4400, with support seen at 1.4100 and 1.4000.
Looking ahead, domestic risks are limited until Friday’s employment release. Bank of Canada (BoC) risks will be in focus next week, particularly following comments from Governor Tiff Macklem and Senior Deputy Governor Rogers at the IMF meetings in Bangkok.