The Canadian Dollar (CAD) is showing slight gains this morning, although it is considered a relative underperformer compared to a weakening US Dollar (USD). Shaun Osborne, Chief FX Strategist at Scotiabank, highlights that the Mexican Peso (MXN) is also losing ground amidst speculation surrounding President Trump’s interest in implementing tariffs.
Data from yesterday’s Canadian Consumer Price Index (CPI) release showed mixed results. Despite this, the focus remains on the Bank of Canada’s willingness to potentially lower interest rates. The lower than expected headline CPI reading of -0.1% month over month may prompt the central bank to consider a rate cut. Market pricing has already factored in a 25bps cut on the 24th, leading to a widening of the US/Canada term spreads.
Looking at the technical aspect, the intraday high from yesterday resulted in a bearish ‘shooting star’ candle pattern on the daily chart. This formation indicates a potential peak for the USD in the short term. Although the USD experienced modest losses, it seems to have found support around the 1.3655/60 level today.
Overall, the Canadian Dollar’s performance today is overshadowed by broader USD weakness and uncertainties surrounding future monetary policy decisions by the Bank of Canada. Traders and investors are closely monitoring the developments in the market to gauge the next steps in currency movements.