The Canadian Dollar (CAD) is soft, trading at fresh lows and plumbing levels last seen in late May as market participants respond to risks related to trade and consider their implications for the BoC, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Trade policy uncertainty remains a core concern for the BoC

"Comments from both President Trump and PM Carney have pushed back on expectations for an agreement by the August 1 tariff deadline. Trade policy uncertainty remains a core concern for the BoC, as conveyed by Gov. Macklem in Wednesday’s post decision press conference. A dovish hold as delivered, and the BoC remains attentive to downside risks."

"This week’s central bank events have delivered a blow to the CAD’s fundamentals, widening yield spreads in a CAD-negative manner. Our USD/CAD FV estimate has climbed into the low 1.37s (1.3715 specifically). Near-term domestic risk lies with the 8:30am ET monthly GDP release for May."

"USD/CAD is extending its push higher with a sixth consecutive day of gains. The RSI is bullish and pushing above 60 but remains shy of the overbought threshold at 70, leaving ample room for further upside. There are no major resistance levels ahead of the 61.8% retracement of the Sept-Feb rally at 1.3944. We look to a near-term range bound between 1.3800 support and 1.3900 resistance."