CAD Softer Amid Weak Risk Appetite – Scotiabank
Weak risk appetite continues to pressure the Canadian Dollar (CAD) lower this morning, though its losses are more moderate compared to other high-beta and commodity currencies, according to Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret.
BoC Remarks and Fiscal Policy
“BoC Governor Macklem’s remarks yesterday afternoon stayed on the messaging delivered after last week’s policy decision. Monetary policy is somewhat 'stimulative' but there were limits on what the BoC can do to offset the headwinds from trade turmoil. Finance Minister Champagne will table a 'no surprises' Federal budget just after 4pm. Core elements of the government’s fiscal plans are already known.”
The government plans increased spending on defence, housing, and infrastructure alongside spending cuts aimed at addressing the economic challenges arising from US trade policies.
Trade and Legal Developments
“Note the US Supreme Court will hear arguments on the legality of President Trump’s use of emergency powers to impose tariffs Wednesday. A decision is unlikely before early next year (February) at this point. Canadian trade data are delayed by the US government shutdown (the US and Canada rely on reciprocal import data to tabulate balances).”
Currencies and Market Levels
Spot gains are approaching the 1.4080 high from mid-October, which is the key resistance level against further USD gains extending toward the mid-1.41 range and retracement resistance at 1.4160. Intraday support for USD stands at 1.4040/50. For USDCAD, losses need to deepen below 1.4040 to signal a stronger downward move.
Author’s summary: The Canadian Dollar faces moderate declines amid weak risk appetite, constrained by BoC policies and US trade uncertainties, with key market levels defining short-term price action.