The Canadian Dollar (CAD) is unchanged on the session after shrugging off domestic developments with ease yesterday, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD holds Wednesday’s gains

“The BoC rate cut was no surprise and while the policy spread over the Fed is a yawning 125bps now, markets are expecting the Fed to catch up with the BoC’s easing process quickly in the coming months. Meanwhile, the end of the NDP’s “supply and confidence” support agreement with the minority Liberal government failed to move the CAD. The agreement was supposed to last into mid-2025.”

“The breakup does not necessarily accelerate the next federal election but the Liberals will need the support of the NDP or the Bloc on a case-by-case basis to pass legislation and/or avoid losing a confidence vote. Parliament returns on September 16th. Near-term CAD trends hinge primarily on the US jobs report.”

“Markets are unlikely to move too far in the next 24 hours or so but the technical feel of USDCAD is a little softer after spot dropped sharply from resistance in the upper 1.35 area yesterday and cracked short-term trend/consolidation support, now close resistance, at 1.3530/35. Intraday weakness below 1.3495 may see USD losses leak a little more in the short run.”