Canadian Dollar: Consolidation against US Dollar with limited gains – Scotiabank
Scotiabank strategists Shaun Osborne and Eric Theoret describe USD/CAD around 1.4215 as consolidating, with the Canadian Dollar retaining a soft undertone despite narrower US–Canada front-end spreads. They note United States-Mexico-Canada Agreement (USMCA) non-renewal prolongs trade uncertainty, while the Bank of Canada's (BoC) Q2 Business Outlook Survey may reflect this. CAD is seen as fundamentally cheap, but its undervaluation versus equilibrium has narrowed, implying limited upside potential.
CAD soft as trade risks linger
"The CAD retains a soft undertone. While front-end US/Canada spreads have narrowed over the past week, the CAD has been unable to pick up any ground."
"Confirmation that the US would not renew the USMCA agreement was perhaps no great surprise and while there is still room for trade talks to progress, the outcome means a prolonged period of uncertainty for Canadian and Mexican exporters."
"The BoC’s Q2 Business Outlook Survey this morning is likely to reflect that uncertainty to some extent at least. The CAD continues to look fundamentally cheap but the undervaluation relative to our equilibrium estimate (1.4141 this morning) has narrowed steadily over the past month which points to limited upside potential for the CAD."
"But there is also the possibility that the sustained USD rally over the past six weeks is merely pausing ahead of another push higher. The 1.4250/00 range should continue to offer some resistance to a USD advance for now. Support is 1.4150 and 1.4075/80."
"Neutral—USD/CAD price action is consolidating. There are some negative signs from short-term price action and the USD remains extremely overbought on the daily RSI oscillator."
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Wall Street giants collectively raise rate hike forecasts, US Treasury futures continue to fall, gold drops over 1% to break 4000
After the US October CPI exceeded expectations, Goldman Sachs and Nomura added a forecast for an interest rate hike in March next year, while Deutsche Bank included a forecast for a rate hike in January next year. Currently, the market has fully priced in a 25 basis point rate hike in December, with a 13% probability for a 50 basis point hike. On Wednesday, the US Treasury spot market was closed, but Treasury futures continued to fall, with corresponding yields rising by about 2 to 4 basis points, and spot gold came under pressure, dropping by 1.1%.
No Need to Worry About the Cooling Down of AI Data Center Construction? The US Import Boom Is Unlikely to Subside in the Short Term, Real Impact May Come in 2029
It takes an average of 4.8 years from finalizing investment to starting construction of a data center project, and an additional 2.6 years from construction start to becoming operational. Servers usually cannot be installed until after the building structure and racks are completed. For trade partners such as Taiwan (China), South Korea, and Mexico who rely on US data center supply chain demand, the inertia in construction timelines provides at least a one- to two-year buffer for future exports.
Federal Reserve Major Debate: When Should the Tenure of “Number Three” Williams End?
The main point of contention is whether Williams should step down in June 2028, upon completing a full 10-year term, or in June 2027, when he reaches the mandatory retirement age of 65. Analysts point out that the Federal Reserve Board holds ultimate discretion; if he leaves early, Fed Chair Waller would be able to assert greater control over the appointment to this critical position. However, forcing Williams to shorten his term could easily be interpreted as political manipulation. Williams himself is expected to serve until June 2028.
Crypto prices
More
