The Canadian Dollar showed its first modest gain against the US Dollar in eight sessions Thursday, though strategists at Scotiabank warn the currency maintains a soft underlying tone. Shaun Osborne and Eric Theoret attribute the minor rebound to firmer May Consumer Price Index data from Canada and more stable US-Canada interest rate spreads. However, the brief uptick appears insufficient to reverse the broader weakening trend that has pressured the loonie over more than a week of consecutive losses.
The CAD’s persistent weakness comes despite supportive inflation figures that could typically bolster currency strength. Traders are watching whether improved CPI data and narrowing yield differentials can provide sustainable support or if the bearish momentum will reassert itself. The eight-session losing streak underscores vulnerability in the Canadian currency as it struggles against broader US Dollar strength.
FXnCO Insight
USD/CAD short-term positioning should remain cautious on the long CAD side, as one session of modest gains fails to override the established downtrend in the loonie despite marginally supportive domestic data.
Source: FXStreet