Positive factors less likely to drive CAD than draggers:
Trump’s protectionist declarations, notably labelling NAFTA as the “worst trade deal in the history of the country”, make the Canadian dollar especially vulnerable in the weeks ahead. Clinton has been ahead in the polls most of the time, but Trump is again catching up.
Clinton’s lead is less than two points, suggesting that the election outcome is likely to be very uncertain until the vote. The threat weighing on Canada’s status as a privileged trade partner should be increasingly discounted by FX markets.
In addition to that BoC’s dovish shift biases near-term CAD weaker: The BoC September policy meeting was dovish, as the bank significantly shifted the risk profile to inflation from “roughly balanced” to now “tilted somewhat to the downside”.
The commodity-related Canadian dollar was also hit by tumbling crude price on Friday due to reports that Iran's August crude oil exports jumped 15% to a five-year high of more than 2 million barrels per day, sparking fresh concerns over a global supply glut. Supply adjustment or an OPEC deal causes crude to pierce $60/bbl earlier than expected.
USDCAD has been trading sideways in a range for months but is currently testing an important resistance area. A decisive break of the 1.32 region would open the door for fast gains.
From the nutshell showing delta risk reversals of USDCAD, you can probably make out that the pair has been one of the most expensive pairs to be hedged for upside risks as it indicates calls have been relatively costlier over puts which indicate upside risks of spot FX is anticipated and hedging for such risks is relatively more expensive.


2025 Market Outlook: Key January Events to Watch
Bank of Japan Governor Signals Gradual Progress Toward 2% Inflation Target
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift?
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure
ECB Eyes Rate Hike Amid Iran Conflict-Driven Energy Price Surge
Paraguay Central Bank Holds Interest Rate at 5.5% Amid Slowing Growth
China's Refining Industry Faces Major Shakeup Amid Challenges
Bank of America Posts Strong Q4 2024 Results, Shares Rise
Moldova Criticizes Russia Amid Transdniestria Energy Crisis
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts
Goldman Sachs Delays Bank of England Rate Cut Forecast Amid Middle East Inflation Risks
RBA Raises Cash Rate to 4.10% in Closest Vote Since Transparent Voting Began
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data
BOJ Holds Interest Rates Steady Amid Middle East Uncertainty




