USD/CAD ignores Ottawa – Scotiabank developments

The Canadian dollar (CAD) is flat in the session after easily ignoring domestic developments yesterday, notes Shaun Osborne, chief FX strategist at Scotiabank.

CAD holds Wednesday’s gains

“The BoC rate cut was no surprise, and while the policy spread across the Fed is 125bp now, markets expect the Fed to quickly catch up with the BoC’s easing process in the coming months. Meanwhile, the NDP’s endorsement deal with the Liberal minority government failed to move the CAD. The deal was supposed to last until mid-2025.”

“Separation does not necessarily speed up the next federal election, but the Liberals will need the support of the NDP or the Bloc on a case-by-case basis to pass the legislation and/or avoid losing the confidence vote. Parliament returns on September 16. Near-term CAD trends depend primarily on the US jobs report.”

“Markets are unlikely to move too far in the next 24 hours or so, but USDCAD’s technical feel is a little softer after the spot pulled sharply lower from yesterday’s upper 1.35 area resistance and broke short-term trend/consolidation support, now resistance nearby. , at 1.3530/35. Intraday weakness below 1.3495 may see USD losses pared a bit more in the near term.”