The Canadian dollar continues to trade in a narrow range after once again failing to sustain a move below 1.40 against the US dollar, according to Corpay in a Friday note.
Improving domestic economic conditions are providing a boost, but ongoing trade risks with the US remain a key factor limiting the Canadian dollar's upside, wrote Corpay Chief Market Strategist Karl Schamotta in the note.
Friday's Labour Force Survey for July is expected to confirm a third straight month of jobs growth, with the unemployment rate remaining unchanged at 6.5%, adding to evidence of a gradual economic recovery.
However, lingering uncertainty over President Donald Trump's Aug. 19 tariff measures remains a headwind for investor confidence and the loonie, added Corpay.
A firmer fundamental backdrop should help lift the Canadian dollar toward year-end, though the currency's recovery could face periodic setbacks, said Schamotta.