Spot is little changed. After a firmer start yesterday, the Canadian Dollar (CAD) eased back to the 1.40 area as markets wrestled with the uncertainty prompted by President Trump’s latest tariff threat (alongside last week’s termination of bilateral trade talks), Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Trade uncertainty overshadows Wednesday BoC decision

"Asked by a reporter about his weekend comments on an additional 10% tariff on Canada, the president could not or would not provide any additional details and said he didn’t want to talk about it."

"While ignoring the latest developments may feel like the right thing for the CAD, at least until there is a bit more clarity around it, the worry of trade tensions seems likely to keep the CAD tone defensive for now. Some support may come tomorrow from the Bank of Canada opting for a neutral cut, in contrast with what may be a dovish ease from the Fed."

"There is little change in the CAD’s short-term technical condition. The USD made little impression on supports in the upper 1.39 area yesterday but the general drift in funds from the mid-October high continues. The 40- (1.3918) and 200-day (1.3955) moving averages continue to represent key USD supports. Resistance remains 1.4080 ahead of a push to test retracement resistance at 1.4150/60."