CAD may stabilize in the short run – Scotiabank

The Canadian Dollar (CAD) is little changed in quiet trade. Spot based near 1.4150 late last week and may struggle to improve much further while tariff risks remain unclear. The CAD continues to trade above estimated fair value (1.4261) which also suggests limited scope for additional progress in the short run, Scotiabank's Chief FX Strategist Shaun Osborne notes.

CAD is little changed in quiet trade

"Canadian CPI is expected to post no gains in the January month, keeping the Y/Y pace of inflation steady at 1.8%. Scotia is a little above the consensus at +0.1% M/M and 1.9% for the year. The core Median rate of inflation is expected to hold steady at 2.4% in the year while the Trim measure may edge up to 2.6% (from 2.5% in December)."

"USD-negative signals on the longer-term charts and spot’s push below key support at 1.4250/60 (recent USD lows and the 38.2% retracement of the USD’s Sep/Jan rally) last week tilt broader risks towards a further USD drop to the 1.40/1.41 area to tick off the next retracement targets in the weeks ahead."

"Short-term trends suggest some consolidation in price action may develop in the next few days, however. Resistance is 1.4265/75 now and 1.4335/55."