The Canadian Dollar (CAD) is little changed on the session. Broader market sentiment is relatively neutral, with European stocks a little firmer while US equity futures are currently trading lower. Our fair value estimate for USD/CAD has edged a little lower into the end of the week (1.3839) as factors driving the estimate edge marginally more supportive for the CAD. With markets overall fairly calm and spot trading near its estimated equilibrium, narrow range trading may extend today, Scotiabank's Chief FX Strategist Shaun Osborne notes.

GDP in focus ahead of BoC

"This morning’s Canadian GDP data will likely reflect sluggish growth for March and Q1 overall. Growth headwinds remain unabated from US tariff developments while wildfires in Alberta may also start to impinge on oil production. Very soft data today may bolster market expectations for a rate cut from the Bank of Canada next week. Swaps are currently pricing in only 6-7bps of easing risk."

"USD/CAD is tracking a little higher on the week overall but net USD gains are not enough to challenge the bearish implications of last week’s net USD decline (bearish “engulfing” line on the week chart). Also, the net drop in the USD seen in yesterday’s session overall formed a daily outside range reversal patten on the chart. Trend momentum signals remain bearish on the daily and weekly studies but have eased to neutral on the intraday oscillator."

"That may mean a little more range trading for funds in the short run but the broader, technical pointers remain tilted to the downside. That should mean limited scope for USD gains (resistance at 1.3850/60) and a little more weakness in the USD in the days ahead. Support is 1.3785 and 1.3750."