CAD steady to slightly lower on temporary tariff relief - Scotiabank

The CAD is a moderate underperformer on the session, easing slightly alongside its commodity peers amid fragile risk appetite, Scotiabank's Chief FX Strategist Shaun Osborne notes. 

Corrective USD/CAD gains may extend to 1.4400/50

"President Trump gave Mexico and--eventually--Canada a break on the 25% tariffs until April 2, signaled just as the S&P 500 was testing its 200-day MA. Steel and aluminum tariffs are still coming next week, according to the president, and reciprocal tariffs are still on track for early April, he confirmed in a TV interview this morning, adding that tariffs could go up over time (which would, presumably, then not make them 'reciprocal' anymore)." 

"Signals for the broader economy may help inform BoC policymakers about the rate outlook beyond next week's decision which is expected to result in a 25bps rate cut--although market pricing has shaved a couple of bps off of the anticipated easing following the back and forth in Washington on tariffs. Sunday sees the conclusion of the Liberal party leadership race. Voting concludes at 15ET and the winner should be announced shortly after."

"The USD's drop under support in the mid/upper 1.43s yielded the expected test of 1.4250 (which remains support) yesterday but intraday price action suggests a more neutral tone for spot today. A mild correction from yesterday's low may see the USD retest the mid-1.43s but the broader tone of short-term price signals is bearish after the early week rejection of 1.4550 (firm resistance). Corrective USD gains may extend to 1.4400/50 but perhaps not much more for now."