The Canadian Dollar is under pressure because risk appetite is weak, but its losses are not as severe as those of other commodity currencies. Bank of Canada Governor Macklem has reiterated that while monetary policy supports the economy, it has its limits due to ongoing trade issues. Finance Minister Champagne is set to present a Federal budget that will prioritize defense, housing, and infrastructure, with spending cuts aimed at tackling challenges from US trade policy. The US Supreme Court will assess the legality of the tariffs imposed by President Trump, with a ruling expected in February next year. Additionally, Canadian trade data is delayed because the US government shutdown is disrupting data sharing between the two countries.

USD/CAD Exchange Rate

The USD/CAD exchange rate is approaching resistance at 1.4080, with the potential to rise towards 1.41 and 1.4160. Intraday support for the USD is found between 1.4040 and 1.4050. The CAD might stabilize if USD/CAD dips below 1.40, but stronger support for the CAD is at around 1.3890 to 1.3900. As of November 4, 2025, global risk appetite is low, pushing the Canadian Dollar down. This is further heightened by recent data indicating a slowdown in global manufacturing, which has brought WTI crude prices down to the low $70s per barrel. These factors make it hard to remain optimistic about high-risk commodity currencies right now. The messages from the Bank of Canada, echoing last week’s policy decision, are still relevant. October’s inflation rate was slightly lower than expected at 2.8%, providing little pressure for the central bank to combat these challenges. This reinforces the perception that monetary policy has its limits in the current climate. The ongoing issues stemming from US trade policies feel familiar, reminiscent of past turmoil when President Trump used emergency powers. Now, new disputes over digital service taxes are putting additional strain on Canadian exporters and affecting the currency. The focus on spending cuts in the upcoming federal budget shows how seriously these economic threats are being addressed.

Positioning for Further USD/CAD Gains

In light of these circumstances, strategizing for further USD/CAD gains seems wise as the pair tests resistance near 1.4080. There are opportunities to buy USD call options with strikes aimed at the mid-1.41s, looking towards retracement resistance at 1.4160. This approach provides a defined-risk opportunity to profit from expected weaknesses in the Canadian Dollar over the next few weeks. For traders preferring more cautious strategies, selling out-of-the-money CAD calls could be a method to earn premium while betting that the currency will not experience a significant rally. We would only rethink this bearish outlook for CAD if the USD/CAD spot rate drops decisively below 1.4000. Until then, the easiest path appears to be upward for the US dollar. Create your live VT Markets account and start trading now.

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