CAD softer amid weak risk appetite – Scotiabank

CAD Softer Amid Weak Risk Appetite – Scotiabank

The Canadian Dollar (CAD) is trading lower this morning due to weak risk appetite. However, its losses are more moderate compared to other high beta and commodity-linked currencies, according to Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret.

Bank of Canada and Fiscal Outlook

Bank of Canada Governor Macklem reaffirmed the message following last week’s policy decision, indicating that monetary policy remains somewhat stimulative. Still, the BoC faces limits in countering the negative impact from ongoing trade disruptions.

“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 is expected to present a federal budget shortly after 4 p.m. that will contain no surprises, as the main fiscal measures are already public.

“There will be more spending on defence, housing and infrastructure projects on the one hand and spending cuts on the other in response to the economic challenges thrown up by US trade policy.”

Trade Policy and Market Developments

Key uncertainties include the upcoming US Supreme Court hearing on the legality of President Trump's use of emergency powers to impose tariffs. The court is unlikely to issue a decision before February next year.

Additionally, Canadian trade data releases are delayed due to the US government shutdown, as Canada and the US rely on each other’s import data to calculate trade balances.

USD/CAD Technical Levels

The Canadian Dollar is near resistance at 1.4080, a level from mid-October, which is currently the main barrier against further USD gains pushing towards the mid-1.41 range. Additional retracement resistance is around 1.4160, with intraday support zones at 1.4040 to 1.4050.

To confirm a sustained CAD rise, USD/CAD losses would need to extend below 1.40.

Summary

Moderate weakness in the CAD reflects risk aversion and trade uncertainties, while upcoming fiscal measures and US legal rulings will further influence currency movements.

Author’s summary: The Canadian Dollar shows moderate declines amid cautious risk sentiment, constrained monetary policy, and trade-related pressures, with key fiscal and legal developments ahead.

FXStreet — 2025-11-04