The Canadian Dollar (CAD) has shown stability amidst stock volatility, maintaining a narrow range near Friday’s closing level. The fair value estimate for CAD has increased to 1.4133, indicating a decline in its deviation from equilibrium over the past week.
The Bank of Canada’s Q1 Business Outlook Survey is anticipated to reflect concerns regarding US tariffs, while soft job data has raised expectations for potential easing.
Usd Cad Market Update
USD/CAD was neutral on Friday, with the USD displaying a weak downtrend, potentially stalling around 1.4270. Key resistance levels are noted at 1.4400/20, with support around 1.4025/30 and 1.3940/50.
The Canadian Dollar has managed to remain quite steady, especially when considering the broader instability in equity markets last week. Its position close to where it finished on Friday suggests we aren’t seeing much disorder in foreign exchange flows—for the moment. What’s worth noting here is that the fair value estimate for the CAD has crept up to 1.4133. In practice, that tells us that the Loonie has moved closer to its perceived “true” value, at least based on current economic indicators and broader macro assumptions. In essence, the market’s overpricing—or underpricing—has become less pronounced. For those involved in trading instruments tied to currency movements, this constrains some of the easier dislocation plays seen earlier this quarter.
One of the upcoming risk events is the report out of Ottawa—the Q1 Business Outlook Survey from the central bank. It’s not something that typically stirs sharp currency reactions, unless it provides fresh signals on forward-looking sentiment. This time, however, we expect it might draw a bit more attention. The possibility of mounting trade headwinds stemming from our southern neighbours could show up in corporate commentary. We are positioned for a more cautious tone, especially if Canadian firms begin to express alarm over external pricing pressure or future export conditions.
Job data has also begun to soften. And that’s not a minor development. Weakening employment metrics have already started to shift expectations around policy direction from the BoC. The curve is clearly starting to price in a greater probability of easing within the next two quarters. This needs to be folded into any funding position forward plans, particularly where carry becomes sensitive to short-term rate expectations.
Key Technical Levels And Trader Sentiment
When it comes to USD/CAD, Friday was essentially static, which we can read as relative indecisiveness in the pair. The US Dollar itself is drifting lower but lacking conviction; that movement seems to be decelerating, and any push beyond 1.4270 could lose steam in the absence of more hawkish data or cross-asset risk aversion. From a technical point of view, two key bands remain relevant—resistance at 1.4400/20 and support in the neighbourhood of 1.4025/30, then again lower at 1.3940/50. These levels aren’t just numbers—they’re psychological barriers traders are already using to structure short-term bets.
We should be watching options implied vols as the Bank of Canada meeting approaches. If skew begins to widen particularly on the downside, it confirms growing concern over easing probabilities. Until then, ranges are likely to be respected barring external catalysts. We’ll be adjusting delta exposure accordingly.
