USD/CAD holds a narrow range around 1.26. Although the pair may experience some more range trading in the short-term, economists at Scotiabank expect the loonie to gain traction as commodity prices stay elevated.

Technical pointers suggest more downside risk for USD/CAD

“With crude still trading well north of $100 and commodity prices generally elevated while broader market volatility continues to recede, we remain constructive on the CAD outlook – although rising US yields may become a headwind for the loonie if domestic yields fail to keep up.”

“So far, however, gains have been capped around 1.2620/25 and we note that short-term trend signals continue to lean bearish, limiting scope for USD gains.”

“We look for more range trading in the short run but feel technical pointers continue to suggest more downside risk for the USD.”