The Canadian Dollar (CAD) rebound petered out below 1.43 yesterday, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
Unlikely to be a CAD recovery ahead of April 2’s tariff update
“A slightly firmer USD ahead of the Fed has added to the lift in funds today but investors will be reluctant to bid up the CAD too far ahead of more clarity on tariff risks facing Canada. The USD still looks overvalued relative to what tariff action has been deployed—and what might yet emerge.”
“But there is unlikely to be a significant recovery in the CAD ahead of April 2’s tariff update and even then, wide short-term, rate spreads really do need to narrow significantly to drive the CAD sustainably higher.”
“A firm rebound from yesterday’s intraday low around 1.4270 set a bullish, short-term reversal signal on the 6-hour chart (outside range higher). The rebound coincided with spot testing trend support for the USD off the September low. USD/CAD gains may extend to the 1.4350/80 zone in the near term. A break above the upper 1.43s would pave the way for a return to the low/mid-1.44s. Support is 1.4250/70. “
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