CAD slips through 1.41 – Scotiabank | FXStreet
The Canadian Dollar (CAD) continued to weaken this morning, falling about 0.2% against the US Dollar (USD) and becoming one of the day's underperformers, according to Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret.
“As expected, the Federal budget laid out significant spending on housing, defence, infrastructure and productivity and competitiveness, all aimed at boosting investment and lifting growth. The red ink spillage is significant, though with the current FY deficit forecast to rise to CAD78bn (well above the CAD42bn projected under the previous government back in December).”
The analysts noted that the minority government will need political support to pass the budget legislation, but another election appears unlikely. They added that the CAD remains unimpressed as spot gains deviate more sharply from their fair value estimate of 1.3917.
“Spot dollar gains through the 1.4080 resistance point (now initial support) have been flagged as a risk for a while now and the USD’s move through the 1.41 handle this morning points to further appreciation to the 1.4160 area (50% retracement of the Feb/Jun decline in the USD at 1.4167).”
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Author’s Summary
The Canadian Dollar extended its decline below 1.41 as Scotiabank analysts highlighted fiscal pressures and technical risks pointing to further USD strength ahead.