Scotiabank Sees Canadian Dollar Undervalued Despite Lagging G10 Peers

Scotiabank strategists Shaun Osborne and Eric Theoret have identified the Canadian Dollar as undervalued near the 1.41 level against the US Dollar, according to FX Street. Despite this, the CAD remains flat versus the USD and is underperforming most of its G10 currency counterparts.

The analysts attribute the Canadian Dollar’s subdued performance to wider yield spreads between the US and Canada, which have put downward pressure on the currency. However, they believe this movement is overstretched, suggesting potential for a rebound.

For Japanese investors, monitoring the Canadian Dollar’s valuation is crucial as shifts in North American currencies can influence global risk sentiment and commodity markets, which often impact FX and equity portfolios in Japan.