Forex Flash: USD/CAD appears poised to move back towards parity - Scotiabank

FXstreet.com (Córdoba) - CAD is essentially flat leading into the North American open, but has gained 2.1% since Friday's weakest point, notes Camilla Sutton, analyst at Scotiabank.

"The rally in CAD has been on the back of: 1) reassurance from Europe, which has helped to soothe risk aversion; 2) stronger than expected official PMIs from China, which is encouraging for those who expect a soft landing from China (ourselves) and commodity prices; 3) oil prices, which have moved higher on the back of supply issues, and are important for the Canadian economy and 4) an ongoing commitment from central banks that they will do what is necessary for the stability of the financial system", says the analyst.

"The looming risk for CAD is Friday's nonfarm and Canadian employment releases; however CAD appears poised to move back towards parity", she adds. "We have made no change to our forecast of a strengthening CAD, which closes the year at 1.01 (or in USDCAD terms 0.99)".

"There is no data today and liquidity will be materially reduced with the US celebrating July 4th. We'd expect today's range to fall between 1.0080 and 1.0163 (the 50-day moving average)", the analyst concludes.