USD/CAD: No obvious sign of weakness at this point – Scotiabank

USD/CAD trades little changed in the mid-1.35s. Economists at Scotiabank analyze the pair’s outlook.

Weak risk mood remains a headwind for CAD

Weak risk mood and marginally lower energy prices are enough to keep the CAD tone defensive for the moment while relatively stable short-term spreads may act as something of an anchor for the CAD. External developments will continue to have a major influence on the CAD tone, however. 

There is some evidence on the short-term chart to suggest that the USD rally is losing some momentum; price action over the second half of the week has topped out in the mid-1.35s and the broader rally in the USD is becoming confined to a narrowing, upward-sloping range, a bearish wedge pattern. But there is no obvious sign of weakness in the USD at this point. 

Resistance is 1.3550/55. Support (bear breakdown trigger) is the wedge base at 1.3525.