Canadian Dollar Trades Soft Despite Elevated Oil Prices – Scotiabank

Canadian Dollar Trades Soft Despite Elevated Oil Prices – Scotiabank

CAD Remains Defensive Amid Cautious Market Sentiment

The Canadian Dollar (CAD) began the North American trading session on Wednesday with a slight decline against the US Dollar (USD), despite elevated oil prices that typically provide support for the commodity-linked currency.

According to a Scotiabank FX note, CAD continues to trade modestly defensively, suggesting that market participants remain cautious. This price action follows Tuesday's session and signals a lack of conviction from CAD bulls, even in a supportive oil backdrop.

Oil Strength Not Enough to Buoy CAD

While oil prices remain firm — a usual catalyst for CAD appreciation — traders appear to be focusing more on:

• US economic data releases, including CPI inflation and bond auctions.
• Uncertainty around global trade talks, which could impact broader risk sentiment.
• Limited movement in interest rate expectations from the Bank of Canada.

These factors are dampening CAD’s upside potential and keeping USD/CAD within a tight trading range.

Scotiabank Outlook

Scotiabank suggests CAD may continue to trade defensively in the short term unless there’s a significant shift in either macroeconomic data or central bank policy expectations.

"The CAD remains slightly softer, with little change in sentiment, even as crude prices hold near recent highs," Scotiabank noted in its morning update.

Internal Linking Suggestions for Tredu.com:

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