The loonie rebounds after dipping to the upper 1.26s against the US dollar. Economists at Scotiabank expect the USD/CAD pair to witness additional losses towards the 1.25 zone.

Spreads to support gains

“We think yield spreads can move a bit further in the CAD’s favour in the coming weeks as a result, helping support CAD gains towards the 1.25 area.”

“The USD’s rebound from yesterday’s low just ahead of 1.26 formed a bullish signal on the short-term chart (bull ‘hammer’) but the lack of upside follow-through demand over the past few hours along with a fairly firm rejection of the 1.2690 resistance zone suggest that the broader trend lower remains intact.”

“A break under 1.2600/10 targets a drop to 1.2550.”