USD/CAD: Limited scope for near-term gains – Scotiabank

The Canadian Dollar is drifting a bit lower on the day. Economists at Scotiabank analyze the USD/CAD pair’s outlook.

Narrower spreads are CAD-supportive

Soft stocks and crude are minor constraints on the CAD in the short-run but some improvement in short-term yield differentials in the CAD’s favour this week rather suggest scope for a little more strength.

Modest gains on the session so far are taking the USD further away from key support (trend and potential Head & Shoulders bear trigger) at 1.3655. 

USD gains through 1.3705/1.3710 may extend modestly to the mid-1.37s, although short-term trend oscillators are starting to align bearishly for the USD which really should limit scope for near-term gains.