CAD weaker but off lows - Scotiabank

USD/CAD snapped higher through the upper 1.41 area in response to Trump's tariff comments last night but the CAD has stabilized through Asian and European to trade back around the 1.41 level, Scotiabank's Chief FX Strategist Shaun Osborne notes.  

CAD off lows on threat of 25% tariffs linked to border security

"Canada's government has responded to the tariff threat by noting that it places the 'highest priority" on border security and noting strong trade links between the two countries. The limited drop in the CAD in response to the tariff news suggests market participants feel the president-elect is saber-rattling at this point to force both Canada and Mexico to act.'

"If it comes to 25% tariffs, the CAD will fall a lot further I have to think. BoC DG Mendes is speaking at 8.20ET. His prepared comments should hit the wires at 8.05ET, however."

"Spot pushed to near 1.4180 overnight but settled quickly back to near the 1.41 point on the charts. New cycle highs for the USD will refresh broader bull momentum the sharp drop back from the intraday peak suggests spot may drift a little lower in the short run as markets consolidate. Support should be firm at 1.3990/00 and firmer still at 1.3945/50."