CAD drifts lower on wider spreads – Scotiabank

The Canadian Dollar (CAD) is a little softer on the session, pulled lower by wider US/ Canada short-term spreads. No minor lift from positive risk sentiment for the CAD this morning, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Gov. Macklem speaks on the outlook today

"BoC Governor Macklem speaks at 13.30ET on the Canadian economic outlook. There are no prepared remarks, no Q&A and no media availability after the event. The governor’s messaging is likely to be similar to those made last week around the policy decision—sluggish growth, headwinds from trade but monetary policy is at the limits of what it can do to mitigate tariff impact."

"Broader caution on the CAD may extend into tomorrow’s Federal budget announcement. Technical signals shifted against the CAD quite significantly over the past week. The sharp USD recovery from the mid-week low helped deliver bullish signals on the intraday (outside range), daily ('morning star' candle pattern) and weekly (bullish 'hammer' candle pattern) charts."

"USD gains look to be technically turbo-charged by that conflagration of bullish price signals. USD/CAD’s push through the low 1.40s bolsters a bullish USD outlook and suggests noted resistance at 1.4080 may be at risk in the next week or so. Upside potential implied by price signals perhaps stretching to the low/mid 1.41 zone, close to noted retracement resistance at 1.4150/60. Support is 1.3975/00."