CAD Softer Amid Weak Risk Appetite – Scotiabank
Weak investor sentiment continues to pressure the Canadian Dollar (CAD) lower, according to Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret. However, the CAD remains relatively resilient compared to other high-beta and commodity-linked currencies.
“BoC Governor Macklem’s remarks yesterday afternoon stayed consistent with the messaging following last week’s policy decision. Monetary policy remains somewhat ‘stimulative’, though the BoC has limited scope to counteract trade-related headwinds. Finance Minister Champagne will present a ‘no surprises’ Federal budget just after 4 pm. The main elements of the government’s fiscal approach are already known.”
The upcoming budget is expected to balance increased expenditures on defence, housing, and infrastructure with targeted spending cuts. These fiscal measures aim to mitigate the economic strain emerging from U.S. trade policies.
“Note the U.S. Supreme Court will hear arguments on the legality of President Trump’s use of emergency powers to impose tariffs on Wednesday. A verdict is not anticipated before early next year, likely in February. Meanwhile, Canadian trade data has been delayed due to the U.S. government shutdown, as both nations depend on reciprocal import data for balance calculations.”
Currency analysts noted that spot gains are approaching the 1.4080 level from mid-October, marking a resistance area that could extend USD gains toward the mid-1.41 range, with retracement resistance around 1.4160. Intraday support for the U.S. dollar stands near the 1.4040–1.4050 range.
Author’s Summary
The Canadian Dollar remains under mild pressure as traders weigh weak risk sentiment, upcoming fiscal policy updates, and lingering trade uncertainties with the United States.