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    Francesco Pesole of ING advises monitoring Canada’s budget announcement for potential support of the CAD.

    by VT Markets
    /
    Nov 4, 2025
    Canada’s budget announcement is getting a lot of attention. People expect measures that will help the economy affected by tariffs. If the government spends more, it might reduce the need for the Bank of Canada to lower interest rates further. We’re keeping an eye on economic data, especially inflation and employment numbers. If inflation is lower than expected, it could strengthen the argument for a rate cut in 2026. On the other hand, if unemployment rises, it may lead to more dovish views. The USD/CAD exchange rate is expected to stay around 1.40 through November. A drop is likely in December due to a projected weakening of the U.S. dollar. Today’s Canadian budget announcement is important. Increased government spending could boost the economy. A strong fiscal plan might support the Canadian dollar by easing pressure on the Bank of Canada to cut rates. This makes the budget a crucial event for short-term currency trends. For most of November, the USD/CAD rate should stay steady near 1.40. This level has been a key psychological barrier, especially during the market turmoil of 2020, indicating it might be tough to break through. Options strategies that profit from low volatility could work well now. However, significant data releases later this week might shake things up, especially the jobs report on Friday. Canada’s unemployment rate has climbed from 6.2% at the start of the year to 7.1%. Another increase could raise expectations for a rate cut in early 2026. Inflation is also a factor, as recent data showing a drop to 2.5% supports the idea of looser monetary policy. Looking ahead to December, the forecast suggests a weaker U.S. dollar, which should lower the USD/CAD pair. We may need to shift from strategies based on stable ranges to more directional bets against the dollar. This might bring the pair back to the 1.37-1.38 range we saw earlier this past quarter.

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