USD/CAD should continue to push lower, scope for gains is limited – Scotiabank

USD/CAD consolidates but still trades shy of fair value, according to economists at Scotiabank.

A drop to the upper 1.32s should play out

“The CAD has corrected some of the more excessive undervaluation our fair value model highlighted last week but spot remains well above its 1.3249 estimated equilibrium, suggesting that the market should continue to push lower and that scope for USD gains is limited in the short run.”

“We spot minor resistance at 1.3450 and stronger resistance at 1.3475/00 intraday. Support is 1.3410 and 1.3355.”

“Broader technical signals suggest a drop to the upper 1.32s should play out after the break under the Dec/Jan range.”