The Canadian Dollar (CAD) is a little softer on the day but continues to range trade between the recent US Dollar (USD) peak and trough, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Markets are waiting for a push in USD/CAD

“The CAD is still holding up somewhat better than our high frequency fair value estimate would suggest is appropriate, however. The estimated equilibrium is little changed around the 1.3820 area today. There are no domestic data releases due, leaving spot trends subject to the broader USD direction and external factors, such as risk appetite, for now.”

“Recall that Friday’s Commodity Futures Trading Commission (CFTC) data showed speculators, real money and hedge fund traders are currently holding a combined record net short position in the CAD. Fresh incentives are needed for markets to add to short CAD positioning.”

“Spot movement remains limited between support at 1.3690 and resistance at 1.3790. The CAD has managed to close a little higher on the session over the past two days, resisting USD gains but the broader technical setup still leans mildly USD-positive. Intraday trend signals are flat but the longer-term DMI signals are bullish-leaning for the USD.”