CAD Slips Through 1.41 – Scotiabank
The Canadian Dollar continued to weaken this morning, losing about 0.2% against the US Dollar, according to Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret.
"As expected, the Federal budget laid out significant spending on housing, defence, infrastructure and productivity and competitiveness, all aimed at boosting investment and lifting 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)."
The analysts noted that the minority government will require support to pass the budget, but a new election remains improbable.
"The CAD looks unimpressed and spot gains are deviating more significantly (well above one standard deviation) from our fair value estimate (1.3917) again."
"Spot dollar gains through the 1.4080 resistance point (now initial support) have been flagged as a risk for a while now and the USD’s progress through to the 1.41 handle this morning points to further appreciation to the 1.4160 area (50% retracement of the Feb/Jun decline in the USD at 1.4167)."
The FXStreet Insights Team curates commentary and analysis from leading financial experts, supported by in-house insights from professional analysts.
Author’s Summary
Scotiabank reports ongoing CAD weakness amid expanded federal spending and forecasts the USD may strengthen further toward 1.4160.