The Canadian Dollar (CAD) is soft, down a marginal 0.1% against the US Dollar (USD) as it performs relatively well against all of the G10 currencies with the exception of Japanese Yen (JPY), Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Outlook for the BoC remains neutral

"The CAD is ending the week with a 0.5% gain, supported by fundamentals and an outlook for relative central bank policy that has delivered a narrowing in interest rate differentials as a result of renewed expectations for Fed easing. The outlook for the BoC remains neutral, with short-term rates markets pricing little in terms of policy changes through October 2026."

"Markets have offered little reaction to this week’s unveiling of a federal energy plan with Alberta, and may be balancing the announcement against the imposition of new tariffs on a range of steel products. Our FV estimate for USD/CAD is currently at 1.3915, softening modestly within its recent range."

"Recent price action has confirmed the importance of resistance around 1.4100 and the latest pullback has shifted our attention to near-term downside risk with a focus on the 50 day MA at 1.4005. The RSI has relinquished its modestly bullish bias and has returned to the neutral threshold at 50, opening up the possibility of a push into bearish territory. We are neutral, absent a break below the 50 day MA, and look to a near-term range bound between 1.3980 and 1.4080."