CAD holds range on the day – Scotiabank

The Canadian Dollar (CAD) is little changed on the day and continues to range trade as markets await developments on the trade front, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Spreads may help steady spot amid trade uncertainty

"The Canadian trade team appears resigned to the fact that tariff-free trade is unlikely to result from talks., Commerce Sec. Lutnick commented over the weekend that much of US/Canada/Mexico trade was tarifffree but the US will use tariffs as leverage to open Canadian markets. Tariff uncertainty may be closing the window on the potential for the BoC to cut rates much further."

"Canadian short rates have risen some 40bps since the April low, more than double the rise in US 2Y yields, resulting in some spread compression that should be modestly CADsupportive at least. The Bank of Canada’s Q2 Business Outlook Survey (10.30ET) may shed more light on Canadian businesses’ response to current challenges."

"While USD/CAD has crept above trend resistance off the February high on the weekly chart, the CAD is reluctant to cede gains which took spot back to the last Fibonacci retracement support (1.3744) ahead of a full retreat to 1.3420. I still rather think the USD is facing stiff resistance in the 1.3750/00 zone. Support is 1.3700/05 and 1.3650."