Scotiabank’s Oct. 27 update put the Canadian dollar at 1.4014 per U.S. dollar as rate decisions in Ottawa and Washington approached, with both scheduled for Oct. 28.
The note identified Chief FX Strategist Shaun Osborne and FX Strategist Eric Theoret. Their model fair-value estimate was 1.4020, 0.0006 Canadian dollars above the quoted rate. In USD/CAD notation, the 1.4014 level means one U.S. dollar was priced at 1.4014 Canadian dollars.
The listing followed Monday’s return above C$1.40, which EconoTimes’ account of the move said partly reversed the prior week’s decline as oil prices fell ahead of the two rate decisions.
Scotiabank described the Canadian dollar’s performance against the U.S. dollar as flat. It lost ground to the New Zealand dollar, Norwegian krone and Australian dollar, while strengthening against the euro, British pound and Japanese yen. The bank cited a narrowing gap between U.S. and Canadian two-year rates as one source of improved sentiment toward the currency. It also said the options market had nearly eliminated the extra premium for protection against a weaker Canadian dollar.
Scotiabank gave USD/CAD a “Bearish/neutral” technical rating and described the pair as consolidating around 1.40. Its 50-day moving average stood at 1.4018, 0.0002 below the fair-value estimate. The bank said doji candles on Friday and Monday pointed in opposing directions.
The Associated Press reported that Prime Minister Mark Carney said talks with the U.S. administration had intensified slightly, while Canada’s negotiating position had not changed. Carney said any progress reflected that “the U.S. is coming closer to our position,” AP reported.
The Bank of Canada scheduled its rate announcement for 9:45 a.m. ET on Oct. 28. The Federal Reserve set its decision for 2 p.m. ET that day, followed by a news conference at 2:30 p.m. ET.
