The Canadian dollar (CAD) was little changed on Tuesday, hovering near the 1.40 level after easing from Monday’s firmer start. Markets remain cautious as renewed trade uncertainty, sparked by US President Donald Trump’s latest tariff comments and the recent suspension of bilateral trade talks, weighed on sentiment, Scotiabank Chief FX Strategists Shaun Osborne and Eric Theoret said.
Trade tensions overshadow upcoming BoC decision
When asked by reporters about his weekend remarks on the potential introduction of an additional 10% tariff on Canadian goods, President Trump “could not or would not provide any additional details and said he didn’t want to talk about it,” Scotiabank noted.
The strategists added that while “ignoring the latest developments may feel like the right thing for the CAD until there is a bit more clarity,” lingering trade risks are likely to keep sentiment defensive in the near term. However, some support may emerge from Wednesday’s Bank of Canada (BoC) decision if policymakers opt for a neutral stance contrasting with expectations of a more dovish signal from the Federal Reserve (Fed).
Technical outlook remains unchanged
According to Scotiabank, there has been little change in the CAD’s short-term technical picture. “The USD made little impression on supports in the upper 1.39 area yesterday, but the general drift in funds from the mid-October high continues,” the strategists said.
The 40-day (1.3918) and 200-day (1.3955) moving averages remain key support levels for USD/CAD, while resistance is seen at 1.4080 ahead of the retracement zone between 1.4150 and 1.4160.
