Weak risk appetite is just another reason for markets to nudge the Canadian Dollar (CAD) lower this morning, although CAD losses are at least more moderate than other high beta/ commodity currencies, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Federal budget due after 4pm

"BoC Governor Macklem’s remarks yesterday afternoon stayed on the messaging delivered after last week’s policy decision. Monetary policy is somewhat 'stimulative' but there were limits on what the BoC can do to offset the headwinds from trade turmoil. Finance Minister Champagne will table a 'no surprises' Federal budget just after 4pm. Core elements of the government’s fiscal plans are already known."

"There will be more spending on defence, housing and infrastructure projects on the one hand and spending cuts on the other in response to the economic challenges thrown up by US trade policy. Note the US Supreme Court will hear arguments on the legality of President Trump’s use of emergency powers to impose tariffs Wednesday. A decision is unlikely before early next year (February) at this point. Canadian trade data are delayed by the US government shutdown (the US and Canada rely on reciprocal import data to tabulate balances)."

"Spot gains are closing in on the 1.4080 high from mid-October that stands as the only obvious resistance point to USD gains extending to the mid-1.41 range and retracement resistance at 1.4160. Intraday support is 1.4040/50 for the USD. USDC/AD losses need to extend below 1.40 to steady the CAD in the short run while “safer” technical ground for the CAD is a distant 1.3890/00 right now."