Canadian dollar outlook: CAD in fresh sell-off but avoids the liquidation experienced by fellow commodity currencies

The Canadian dollar (Currency:CAD) has joined fellow commodity currencies the Australian dollar and New Zealand dollar and has been sold-off today:

The pound to Canadian dollar exchange rate is 0.13 pct higher at 1.5899.
The euro to Canadian dollar exchange rate is 0.2 pct higher at 1.3541.
The US dollar to Canadian dollar rate is 0.26 pct higher at 1.0222.

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It is worth noting that while CAD is under pressure it is by no means being liquidated in a similar fashion to the NZD and AUD.

"CAD is weak into the NA open, down 0.5% against the USD, but outperforming the other commodity currencies as AUD-CAD falls to a fresh 2.5 year low (see middle chart). Yesterday’s strong Canadian housing starts (+200k) are encouraging, but the current driver of USDCAD is more broadly based, particularly as commodity currencies and EM are under pressure,"

says Camilla Sutton at Scotiabank.

However, the Canadian dollar's outlook remains firm with a decent technical underpinning.

Sutton says:

"USD-CAD short‐term technicals: bearish all studies warn of further USDCAD downside risk. Support lies at the 100-day MA of 1.0177; while resistance lies at Friday’s open of 1.0264, followed by the psychological 1.0300. However, as EM continues to unwind, we are cautious of adding to outstanding short USDCAD positions."

However, Shaun Osborne at TD Securities says the Canadian dollar's upside momentum appears to have faced:

"USD/CAD’s price action at the start of the week was clearly a consolidation of the sharp slide on Thursday and Friday, and the doji candle formed on the daily chart was a clear sign that bear momentum had faded. The pop higher from yesterday’s tight consolidation range is a constructive sign and the fact that yesterday’s low also sits right on the 61.8 pct retracement of the 1.01/1.04 rally adds further support that the pair has found a decent short term base.

"The overnight rally brings the 1.0260/70 area into view intraday, while a reversal lower should find support in the 1.0200/15 area initially."