CAD slips through 1.41 – Scotiabank | FXStreet

CAD Falls Below 1.41 Against USD – Scotiabank Analysis

The Canadian Dollar (CAD) continues to weaken this morning, underperforming with a 0.2% loss against the US Dollar (USD), according to Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret.

Federal Budget Highlights

The recent federal budget outlines significant spending in areas such as housing, defense, infrastructure, and productivity enhancement, aiming to stimulate investment and economic growth. However, the deficit is projected to rise sharply, expected to reach CAD 78 billion, substantially higher than the CAD 42 billion forecast under the previous government last December.

Political and Currency Impact

The minority government will require support to pass the budget, although another election appears unlikely at this stage. The CAD remains subdued, with spot price movements deviating well above one standard deviation from their fair value estimate of 1.3917.

USD Resistance and Prospects

The USD has surpassed the 1.4080 resistance level, which now acts as initial support. Its rise to the 1.41 level suggests further appreciation toward the 1.4160 range, aligning with the 50% retracement of the February to June USD decline at 1.4167.

"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 minority government will need help for the budget legislation to pass but another election seems very unlikely at this point. The CAD looks unimpressed and spot gains are deviating more significantly (well above one standard deviation) from our fair value estimate (1.3917) again."
"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 progress through to 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)."

The FXStreet Insights Team curates market observations from expert analysts, combining external commentary with internal analysis to provide a comprehensive view.

Author's summary: The Canadian Dollar weakens amid a larger federal deficit and political uncertainty, while the USD shows strength, approaching key resistance levels signaling potential further gains.

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FXStreet FXStreet — 2025-11-05

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