By Ketki Saxena
Investing.com -- The Canadian dollar experienced a slight decrease aganst its the U.S. counterpart, as it consolidated some recent gains, retreating from Friday's 9 month high, which Scotiabank (TSX:BNS) analysts note can be "excused a minor pause for breath" following "a run of solid gains over the past three weeks".
The US dollar meanwhile gained across the board, ahead of congressional testimony scheduled for Wednesday and Thursday from U.S. Federal Reserve Chair Jerome Powell later this week. All G10 currencies displayed declines against the U.S. dollar on Monday, with losses greater than those of Canada's loonie for every currency except the yen.
Also on Wednesday, investors will be keeping an eye out for Wednesday's release of minutes from the Bank of Canada's policy decision two weeks ago when they increased their benchmark rate for the first time since January.
The Canadian dollar however displayed relative resilience despite weakness in equity markets, and weakness in oil due to concerns over China’s economy outweighing OPEC+ output cuts.
Analysts at Scotiabank commented, "Neither soft stocks nor a minor drop in crude oil prices are bothering the CAD at the moment, suggesting a firm undertone persists."
They also note that "CFTC data Friday showed that the CAD remains the biggest FX short position held by Institutional and Leveraged Accounts while Speculative traders remain bearish on the CAD and reduced net short positioning only marginally last week.... The positioning bias against the CAD could provide the CAD with an additional tailwind if investors cover."
On a technical level for the pair, Scotiabank analysts note that "The broader technical picture points to a USD decline towards the upper 1.29s after losing major support in the low 1.33s."
"Gains through 1.3225/30 in the next day or so would give the USD a little more short-term support. There will be firm resistance on gains towards the low 1.33 zone, however, and scope for significant USD gains from here looks very limited on the charts."