CAD Softer Amid Weak Risk Appetite – Scotiabank
According to Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret, the Canadian Dollar (CAD) weakened this morning due to low risk appetite. However, its decline was less severe than that of other high-beta or commodity-linked currencies.
"BoC Governor Macklem’s remarks yesterday afternoon stayed consistent with last week’s policy messages. The monetary stance remains somewhat stimulative, but the Bank of Canada’s ability to counter external trade pressures is limited," Osborne and Theoret noted.
They also mentioned that Finance Minister Champagne is set to present a "no surprises" federal budget after 4 p.m., with the main elements of the fiscal plan already known. These include additional spending on defense, housing, and infrastructure, paired with targeted cuts to address the economic strain caused by U.S. trade policy.
"The U.S. Supreme Court will hear arguments regarding the legality of President Trump’s use of emergency powers to impose tariffs on Wednesday, though a ruling is unlikely before February next year," they added.
Canadian trade data remain delayed because of the U.S. government shutdown, as both countries depend on reciprocal import data to calculate trade balances.
Market Technicals
Spot gains are approaching the 1.4080 peak from mid-October, the key resistance level before potential USD gains toward the mid-1.41 range and retracement resistance at 1.4160. Intraday support for USD remains around 1.4040–1.4050.
Author's Summary
The Canadian Dollar dipped amid global risk aversion and trade uncertainty, though its decline was contained compared to peers, supported by stable monetary and fiscal outlooks.