USD/CAD peaked just under 1.48 yesterday and traded back to a little under 1.44 just before the close in one of the wildest days of spot movement since the GFC, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD may slip back into old range

“There is clearly a strong sense of relief that tariffs have been avoided—for now—but the uncertainty about the Trump team’s goals will remain. The CAD can perhaps settle into a trading range in the short run as markets assess the lie of the tariff land in the next few weeks but scope for CAD gains will remain limited.”

“Canadian yields have firmed up a little from yesterday’s levels, when markets were seriously mulling the risk of an off-cycle BoC rate cut, but spreads remain a major headwind for the CAD.”

“Hefty net USD losses from a major new cycle high yesterday should spell some significant, bearish technical pressure on the USD. But it likely won’t result in a major improvement in the CAD, given non-technical factors. At best, the CAD should be able to settle back into the range that prevailed through mid-December/January between 1.4250/1.4510.”