The Canadian dollar (CAD) collapsed on Friday after the news that President Trump suspended trade negotiations with Canada in response to digital services tax that had to enter into force this week, reports the FX Chief Strategy of Scotiabank, Shaun Osborne and Eric Theoret.
The background in USD/CAD remains technically bassist
“However, the CAD stabilized relatively fast and is effectively back to” square one “this morning after yesterday’s news in the afternoon that the Canadian government will withdraw the tax and restart trade negotiations with a view to reaching a commercial agreement for July 21. Before the news of Friday afternoon, we expected the CAD to progress in the short term and go to the average area of ​​1.35.”
“Keep in mind that our fair value estimate for the USD/CAD is located at 1,3576 this morning. The rebound in the funds at the end of last week can mode Short -term chart, but the broader background in USD/CAD remains technically bassist. “
“The rapid rejection of Friday of levels above 1.37 maintains the focus on the drop for now, but the spot will need to fall below 1,3650 today to make a new downward attempt. It may need a few more days for the markets to reorient towards the wider bearish trend of the USD. Strong resistance remains in 1,3750/60.”
Source: Fx Street
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