CAD Continues to Weaken Below 1.41 - Scotiabank Analysis
The Canadian Dollar (CAD) is losing ground this morning, underperforming with a 0.2% drop against the US Dollar (USD), according to Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret.
Federal Budget Overview
The recent Federal budget outlines considerable spending on housing, defense, infrastructure, productivity, and competitiveness, targeting increased investment and economic growth.
"The red ink spillage is significant, though with the current FY deficit forecast to rise to CAD78bn (well above the CAD42bn projected under the previous government back in December)."
Political Landscape and Currency Impact
The minority government will require support to pass the budget legislation, but another election appears unlikely at present. The CAD remains unimpressed, and the current spot rate is moving significantly above the fair value estimate of 1.3917.
"Spot dollar gains through the 1.4080 resistance point (now initial support) have been flagged as a risk for a while now."
The USD moving beyond the 1.41 level this morning suggests the CAD may weaken further toward the 1.4160 range, which corresponds to a 50% retracement of the February to June USD decline at 1.4167.
About FXStreet Insights Team
The FXStreet Insights Team is composed of journalists who curate market observations from respected experts, blending commercial notes with analyst insights.