CAD steadies after Trump comments on tariffs – Scotiabank
With a week to go before the 1-month reprieve for President Trump’s border tariff threat expires (March 4th), short-term vols are ticking up again. 1-week implied vol touched 7.5% yesterday and are higher again today at 8.95% after Trump commented that tariffs on Canada and Mexico are moving forward, Scotiabank's Chief FX Strategist Shaun Osborne notes.
Choppy range trade around 1.42 may persist
"It was not, however, exactly clear which specific tariff threat the president was talking about in his remarks yesterday—which the rather limited reaction in spot reflects. The president was questioned on Canadian and Mexican border tariffs specifically but appeared to respond in more general terms, mentioning reciprocal tariffs in his remarks."
"Indeed, one US official commented later that the fate of border tariffs on Canada and Mexico is still to be determined but reciprocal tariffs were likely in April, Bloomberg reported. The CAD is steady on the session so far, after slipping modestly on yesterday’s headlines. Broader, choppy range trade around 1.42 may persist in the short run—until there is more clarity on tariffs."
"USD gains extended through resistance at 1.4250/60 in trading yesterday but the lack of follow through demand leaves the USD trading back—just about— below the 1.4250 point this morning. The move up in the USD is not especially convincing but the chop around the 1.42 point is liable to extend a little longer and the USD’s nudge higher tilts risks – if only slightly – more towards a push to the 1.4335/40 area (40-day MA). Support is 1.4150/75."
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FXStreet Insights Team
FXStreet
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