Insights 
VT 
The Canadian Dollar faces pressure due to weak risk appetite, although its losses are not as severe as other commodity currencies. Bank of Canada’s Governor Macklem reiterated that monetary policy remains supportive but has limitations amidst trade issues. Finance Minister Champagne will present a Federal budget focused on defence, housing, and infrastructure, coupled with spending cuts to address challenges from US trade policy.
The US Supreme Court will review the legality of tariffs imposed by President Trump, with a decision expected by February next year. Canadian trade data is delayed due to the US government shutdown affecting data reciprocity between the two nations.
Usd Cad Exchange Rate
The USD/CAD exchange rate is nearing resistance at 1.4080, with potential for further gains towards 1.41 and 1.4160. Intraday support for the USD is between 1.4040 and 1.4050. The CAD may stabilise if USD/CAD falls below 1.40, though stronger footing for the CAD is around 1.3890 to 1.3900.
With global risk appetite low as of November 4, 2025, we are seeing the Canadian Dollar pushed down. This sentiment is amplified by recent data showing a global manufacturing slowdown, which has helped pull WTI crude prices into the low $70s per barrel. These factors make it difficult to be optimistic about high-beta commodity currencies right now.
The Bank of Canada’s messaging, which we remember from last week’s policy decision, still rings true today. With October’s inflation data coming in slightly cooler than expected at 2.8%, there is little pressure for the central bank to intervene against these headwinds. This reinforces the view that monetary policy has its limits in the current environment.
The ongoing challenges from US trade policy feel familiar, reminding us of the turmoil surrounding President Trump’s use of emergency powers years ago. Now, new frictions over cross-border digital service taxes are creating similar headwinds for Canadian exporters and weighing on the currency. The upcoming federal budget’s focus on spending cuts highlights how seriously these economic threats are being taken.
Positioning For Further Usd Cad Gains
Given this backdrop, positioning for further USD/CAD gains appears prudent as the pair tests resistance near 1.4080. We see opportunities in buying USD call options with strikes targeting the mid-1.41s, looking toward the retracement resistance at 1.4160. This strategy offers a defined-risk way to capitalize on expected Canadian dollar weakness in the coming weeks.
For traders looking for more conservative positions, selling out-of-the-money CAD calls could be a way to collect premium while betting the currency will not rally significantly. We would only reconsider this bearish CAD outlook if the USD/CAD spot rate breaks decisively below the 1.4000 mark. Until then, the path of least resistance points higher for the US dollar.
