Canadian Dollar: Undervalued near 1.41 against US Dollar – Scotiabank
Scotiabank strategists Shaun Osborne and Eric Theoret note that the Canadian Dollar (CAD) is flat versus the US Dollar (USD) and lagging most G10 peers. They highlight that wider US–Canada yield spreads have weighed on the CAD, but see the move as stretched.
Scotiabank strategists Shaun Osborne and Eric Theoret have stated that the Canadian Dollar (CAD) is currently trading flat against the US Dollar (USD) and is lagging behind most of the G10 currencies. They highlight that the widening US-Canada yield spread has contributed to the CAD's decline, but they believe the move is overextended.
According to their fair value estimate, the Canadian Dollar is marginally undervalued compared to its current spot in the mid-1.41 range. The CAD is trading flat versus the USD and showing relative losses against most G10 currencies as the market heads into Friday's North American session. Although short-term price action is somewhat positive and indicates a potential pause after a decline starting from September 9th, the rally in USD/CAD may be overdone, with momentum already in overbought territory, as indicated by the RSI at 72.
The next hurdle for the Canadian Dollar is around the 1.4200 level. To the downside, there is little support, with the market struggling to find any significant ground to stand on between the current spot and the psychologically important 1.40 level.
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