Canadian Dollar: Undervalued near 1.41 against US Dollar – Scotiabank

FXStreetSep 25, 2026 3:14 PM

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Scotiabank strategists Shaun Osborne and Eric Theoret note that the Canadian Dollar (CAD) is flat versus the US Dollar (USD) and lagging most G10 peers. They highlight that wider US–Canada yield spreads have weighed on the CAD, but see the move as stretched. Their fair value estimate for USD/CAD at 1.4055 suggests the Canadian Dollar is marginally undervalued versus spot in the mid-1.41s.

CAD undervalued as rally stalls

"The CAD is trading flat vs. the USD and showing relative losses against most of the G10 currencies as we head into Friday’s NA session. Short-term price action is constructive however, and hinting to a potential pause following the relentless decline from September 9th."

"Thursday’s retail sales figures were mixed but had little impact on the CAD and we note the absence of any high level data releases ahead of Tuesday’s monthly GDP for July."

"Wider US-Canada spreads have been a major headwind for the CAD over the past couple of weeks, however the move feels somewhat stretched with limited scope for further tightening in Fed expectations while the BoC feels somewhat underpriced."

"Our FV estimate for USD/CAD is currently at 1.4055, suggesting that the CAD is marginally undervalued at the moment given spot in the mid-1.41s."

"Bullish/neutral—the latest bull move has been impressive with a nearly unbroken run of daily gains since July 9th. The rally in USD/CAD looks overdone at this point however, with momentum already in overbought territory given the RSI at 72."

"The latest price action has revealed a struggle in extending gains much above the mid-1.41s with considerable resistance expected around 1.4200. To the downside, we see little in terms of support between current spot and the psychologically important 1.40 level."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

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