Scotiabank strategists Shaun Osborne and Eric Theoret report that the Canadian Dollar (CAD) has remained steady despite renewed trade tensions between the US and Canada, including targeted import bans announced by the US. The strategists note that the CAD was largely unchanged during the session, showing a 'stoic response' to these developments. They reference a recent post by President Trump regarding 'Canada’s (currency) dollar imbalance,' but conclude that the market did not interpret this as a significant negative for the CAD at this time.
The US announced bans on certain Canadian dairy, alcohol, and motorcycle goods, which are set to take effect on September 29th. However, these measures have had little impact on the CAD, according to Scotiabank. The strategists highlight that underlying CAD fundamentals are improving, and their fair value estimate for USD/CAD has edged down to 1.3736.
From a technical perspective, Scotiabank describes the USD/CAD outlook as USD-bearish, with resistance in the low/mid-1.39s and potential for a decline toward the 1.3500/1.3550 region. They note that USD gains from the late August low stalled and reversed last week, reinforcing the view that the USD downtrend from the mid-year peak is resuming. Trend momentum is described as USD-bearish across short-, medium-, and long-term studies, with moderate USD gains likely to attract selling interest. Key USD support levels are identified at 1.3715/35, ahead of a possible decline back to the 1.3500/50 region. [1]
CONCLUSION
Scotiabank analysts see the Canadian Dollar as resilient in the face of new US trade measures, with improving fundamentals and a bearish technical outlook for USD/CAD. The market has so far shown little reaction to the latest trade developments, and the strategists anticipate further CAD gains if current trends persist.