USD/CAD climbs above 1.4300, upside potential appears as Trump's tariff announcement looms

• USD/CAD gains support amid heightened risk aversion ahead of Trump's scheduled tariff announcement on April 2.
• The Canadian Dollar strengthened as Trump suggested that "a lot" of countries could receive exemptions.
• The S&P Global US Services PMI jumped to a three-month high of 54.3 in March, rising from 51.0 in February.

USD/CAD is trading around 1.4320 during Tuesday's Asian session, recovering after losses in the previous session. The risk-sensitive pair is gaining as traders remain cautious ahead of US President Donald Trump's scheduled tariff announcement on April 2.

However, the Canadian Dollar (CAD) found support as Trump hinted that "a lot" of countries could receive exemptions, though details remain uncertain. Investors welcomed signs that the US may adopt a more measured, targeted approach to tariffs, easing concerns about potential disruptions to Canadian businesses.

Meanwhile, the US Dollar faced pressure due to rising fears of an economic slowdown, driven by concerns over Trump's trade policies. However, this was offset by hawkish comments from Fed Chair Jerome Powell last week. Powell stated, "Labor market conditions are solid, and inflation has moved closer to our 2% longer-run goal, though it remains somewhat elevated."

On the data front, the S&P Global US Composite PMI climbed to 53.5 in March, rebounding from February's 10-month low of 51.6 and marking the strongest expansion since December 2024. This growth was primarily driven by the services sector, which saw a sharp rebound in business activity.

The S&P Global US Services PMI surged to a three-month high of 54.3 in March, up from 51.0 in February and exceeding market expectations of 50.8. Meanwhile, the Manufacturing PMI slipped to 49.8 from 52.7, falling short of the forecasted 51.8. This decline followed February's strongest manufacturing growth in nearly three years.