The Canadian Dollar (CAD) is little changed on the session after edging through the upper 1.3600s in overnight trade, but it is having a decent week relatively speaking, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Gains may be capped by 1.3720-1.3725 area

“A second consecutive weekly gain is on the cards, something it has not achieved since the middle of April. There is no clear reason for the CAD’s relatively firm performance this week and overnight movement leaves spot drifting the furthest from fair value (1.3784 today) since March.”

“The explanation may come from the Commodity Futures Trading Commission (CFTC) positioning data which show record net CAD shorts have accumulated in recent weeks. CAD bears have been persistent in recent months but positioning has not always been rewarded and has sometimes coincided with CAD rebounds, forcing CAD shorts to lightened up.”

“Steady USD losses this week may be finding a base in the upper 1.36 area. Intraday price signals suggest a USD rebound may be developing after spot based around 1.3675/80 in overnight. Gains may be capped by intraday resistance at 1.3720/25 with intraday trend momentum bearish and the daily DMI slipping into neutral now.”