CAD softer amid weak risk appetite – Scotiabank

FXStreet Insights Team FXStreet

Weak risk appetite is just another reason for markets to nudge the Canadian Dollar (CAD) lower this morning, although CAD losses are at least more moderate than other high beta/ commodity currencies, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Federal budget due after 4pm

"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."

"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. 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)."

"Spot gains are closing in on the 1.4080 high from mid-October that stands as the only obvious resistance point to USD gains extending to the mid-1.41 range and retracement resistance at 1.4160. Intraday support is 1.4040/50 for the USD. USDC/AD losses need to extend below 1.40 to steady the CAD in the short run while “safer” technical ground for the CAD is a distant 1.3890/00 right now."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.