CAD underperforms on steel tariff threat - Scotiabank

The Canadian Dollar (CAD) is softer in response to the latest tariff threat from the US, Scotiabank's Chief FX Strategist Shaun Osborne notes. 

CAD holds consolidation range

"But the CAD's loss is relatively minor and spot is holding within yesterday's range and is still trading a little below estimated fair value (unchanged this morning at 1.4387). Tariff threats will keep markets guessing about the outlook for BoC policy." 

"March pricing is a little better than 50/50 for a cut at this point--policymakers may not have enough information to make the call at that point--but April swaps are pricing in 31bps of easing--up a couple of ticks from yesterday. Wide/wider short-term spreads will remain a major drag on the CAD's broader outlook." 

"Spot is holding within a fairly tight trading range that developed after last week's huge market swings. Support is 1.4260/70 while the ceiling of the trading range sits at 1.4370/80 (40-day MA sits at 1.4380 this morning). Broader trading patterns continue to lean a little more constructively for the CAD after the huge reversal from Monday's peak. That may lead to the market to at least try and test support in the upper 1.42s if volatility eases in the next week or so."