The Canadian Dollar (CAD) is a little softer following President Trump declaring that all trade talks with Canada had been 'terminated', Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

BoC policy makers may lean into market pricing for a 25bps cut

"The move came in response to a US TV ad by the Ontario government that was critical of tariffs. CAD losses have been contained within the range of USD/CAD over the past few sessions, however, and look unexceptional at this point relative to its peers on the day. Markets perhaps view developments as a bump in the road in trade talks rather than anything more serious at this point."

"Yesterday’s Retail Sales data for August were in line with expectations of a solid 1% rebound but the preliminary data for September reflected another dip in consumer spending and sustained the outlook for sluggish growth. A tweak, at least, to trade tensions and weak growth momentum would be reason enough for BoC policy makers to lean into market pricing for a 25bps cut at the BoC policy decision next week."

"Solid intraday gains for the USD reinforce support for funds in the upper 1.39s but, with recent ranges holding and the USD still essentially drifting lower from the mid-month high, the case for a renewed push higher in USD/CAD has not yet been made on the charts. Seasonal patterns between now and year-end tend to be CAD-negative, however, which may grease the path of a higher USD to some extent. USD/CAD resistance is 1.4035 and 1.4080 ahead of 1.4150/60."