CAD slips, but steadies on tariff news – Scotiabank

The Canadian Dollar (CAD) slid briefly in response to yesterday’s tariff headlines, making a new cycle low against the USD near 1.46 before recovering slightly. The CAD is little changed on the session so far today, Scotiabank's Chief FX Strategist Shaun Osborne notes, Scotiabank's Chief FX Strategist Shaun Osborne notes.

Markets await developments

"Every piece of analysis that I have seen in the past few weeks (Scotia’s included) has assumed that 25% tariffs on Canada would be deadly for the CAD, potentially driving spot to the 1.60/1.70 area. The fact that the markets are trading so calmly suggests that investors feel that tariffs won’t actually be applied or, if they are, they will not be applied for very long. CAD 1-week vol continues to climb, reaching 12.7% but that implies markets anticipate only about 100 pips of movement in spot either way next week."

"It’s close to freezing in upstate NY over the coming week and colder in Minnesota which will make it uncomfortable if Ontario turns off electricity exports this weekend, as Premier Ford suggested Ontario could do, as retaliation for tariffs. Canadian industry-level GDP is expected to fall 0.1% in the November month—in line with the flash estimate released with the October data."

"A new high for the USD yesterday just under 1.46 disrupts the USD-negative technical developments I have noted on the daily and weekly charts recently. The USD advance was very brief and spot quickly settled back into its former range. On the technical face of it, the USD’s advance to a new high tilts risks back to a further rise and test of 1.47. Support is 1.4400/10 and 1.4360."