Weak equities are helping to maintain the Canadian Dollar’s (CAD) defensive tone, but whether weaker equity markets are enough justification to drive the CAD significantly lower at this point remains to be seen, notes FX strategist Scotiabank, Shaun Osborne.
Further CAD volatility is possible
“Lower liquidity on Monday, when local markets are closed, could open the door for further CAD volatility in response to even weaker equities, but that is not necessarily something well-supported by fundamentals.”
“Beyond weak equities, underlying factors (spreads, crude oil and the overall USD tone) have all moved in favor of the CAD over the past few days, leaving spot trading a large figure above our fair value estimate (1.3785). That should help limit the USD’s ability to rally further to some extent, but the CAD is unlikely to gain too much ground as equities trade defensively.”
“The CAD took a beating yesterday, taking the spot rate close to the late high of 1.2023, just below 1.39. The pair’s rate has consolidated below the figure this morning, but there are few signs of positive price developments for the CAD on the intraday chart. Rather, the USD appears to be pausing before another attempt to move higher from a technical standpoint. Support at 1.3790/00. Resistance at 1.3890/00 and 1.40.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
