There is a subtle split in G10 FX performance on the day, with the AUD and NZD firming and the NOK trading a little stronger overall while the JPY and the CHF are tending to underperform. The Canadian Dollar (CAD) is having none of that high beta/haven division and sits all but unchanged on the session, Scotiabank chief FX strategist Shaun Osborne notes.

Spot continues to look somewhat overvalued

“There is a fair bit of Canadian data out in the coming days but much of it relates to housing and may not have any major impact on spot. The CAD will continue to reflect external—rather than internal, fundamental—or technical developments for the time being.”

“Spot continues to look somewhat overvalued relative to our equilibrium assessment (1.3676 today) which should at least help limit CAD losses. Spot remains relatively stable in the low 1.37s—around retracement support and the 40-day MA at 1.2720/25.”

“But the CAD did close out last week bullishly, with USDCAD forming a huge reversal after briefly trading above 1.39 and closing well below the prior week’s low (forming a bearish key reversal signal on the weekly chart). That should mean limited upside potential for the USD (resistance is 1.3780/90) from here and incremental pressure on supports in the upper1.36s/low-1.37s.”