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Canadian dollar edges near fair value versus US dollar, eyes 1.3970
Scotiabank says CAD-specific catalysts are limited, with USD/CAD largely driven by external factors and US/Canada spreads stabilizing around the 1.40 area.
Scotiabank strategists Shaun Osborne and Eric Theoret said the Canadian dollar is effectively flat versus the US dollar but modestly outperforming other major currencies, trading close to their fair value estimate around 1.40.
They noted that with CAD-specific news limited, USD/CAD has been driven by external developments, while US/Canada spreads have stabilized. The strategists also described broader risk appetite as positive, and said fund flows remain contingent on developments outside Canada.
On the technical side, they highlighted that the outlook stays USD-bearish, with attention on a potential break below 1.3970 to 1.3980 that could prompt the next phase of CAD gains. They also said rallies toward 1.41 are likely to be faded unless the key 1.3970/80 level gives way.
Scotiabank added that trade concerns remain in the background ahead of the August 19 deadline for President Trump’s latest tariff salvo, while pointing to a more positive surprise trend in relative US and Canada data in recent weeks. The firm pegged spot at 1.4006, suggesting CAD is roughly where it should be based on its valuation view.