Canadian Dollar: Range trade with upside bias against US Dollar – Scotiabank

FXStreetSep 10, 2026 2:21 PM

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Scotiabank strategists Shaun Osborne and Eric Theoret note USD/CAD is holding a tight sideways range near 1.38 with no domestic data, leaving the Canadian Dollar (CAD) driven by external factors and technicals. Their fair value model points to a stronger CAD around 1.3700, with spot showing its largest valuation gap in a month. They see limited scope for further CAD drift without new catalysts.

Fair value signals stronger Canadian Dollar

"The CAD has drifted in a tight, sideways range overnight, sticking to yesterday’s close. With no domestic data to focus on this week, the CAD has effectively reverted to being a slave to external developments and technicals."

"Spreads have held relatively steady but could turn a little more volatile in the next few days are markets react to US inflation data. Strengthening crude (and firmer commodities in general) do provide some additional lift to Canadian terms of trade which are not perhaps fully reflected in the CAD currently."

"While spot has drifted sideways, our fair value model has continued to indicate a stronger CAD, settling at 1.3700 today. Spot has been sticking close to the modeled equilibrium but is showing a more significant deviation this morning—reflecting the largest valuation gap in close to a month. That should mean limited potential for the CAD drift to extend, absent new drivers."

"Trend momentum remains USD-bearish across short-, medium-, and long-term studies, meaning that moderate USD gains are likely to draw selling interest. USD support is 1.3715/35 ahead of the decline back to the 1.3500/50 region."

"Neutral/bearish—A firmer USD and a somewhat constructive close yesterday tilts short-term risks a little higher for funds perhaps but broader technical dynamics remain USD-bearish. We spot moderate resistance in the mid/upper 1.38s and firmer resistance in the low/mid 1.39 zone."

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

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