Select Language

Canadian Dollar pares recent gains as trade war rhetoric heats up

Breaking news

Canadian Dollar pares recent gains as trade war rhetoric heats up

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.03.28 07:08
Canadian Dollar pares recent gains as trade war rhetoric heats up

update 2025.03.28 07:08

  • The Canadian Dollar fell 0.32% against the Greenback on Thursday.
  • Loonie markets are recoiling as Canada and the US gear up for a messy trade war.
  • USD/CAD returns to familiar technical territory near 1.4300.

The Canadian Dollar (CAD) shed weight on Thursday, paring away recent gains against the US Dollar (USD) as trade war rhetoric between the US and Canada ramps up. World leaders are quickly growing tired of US President Donald Trump's constant waffling on tariffs he is, then isn't, imposing across the board. Market nerves have completely frayed from reacting to President Trump's ham-handed trade policy approach, and investors are pulling into a wait-and-see period ahead of Donald Trump's self-imposed April 2 deadline to impose a sweeping package of tariffs.

Canadian Prime Minister Mark Carney struck back against recent tariff headlines, cautioning that Canada is prepared to take retaliatory measures against the US. President Trump's self-imposed deadline of April 2 to impose a sweeping tariff policy handbook that includes "reciprocal" tariffs, additional tariffs on Copper, even more additional tariffs on Canadian lumber specifically, and yet even more tariffs on countries that buy Crude Oil from Venezuela.

Daily digest market movers: Canadian Dollar eases as Canada hearse up for tariff fight

  • The Canadian Dollar gave up recently gained ground on Thursday, falling roughly one-third of one percent against the Greenback.
  • Canadian PM Mark Carney: We will fight the US tariffs with actions of our own.
  • Headway on possible tariff concessions which US President Trump may or may be willing to grant on a per-case basis remains difficult.
  • As noted by Canadain PM Carney, nobody is really clear on what tariffs the US plans to actually enact, nor has the Trump administration been clear on what they want in exchange for tariff relief.
  • Key US inflation figures are due on Friday. Personal Consumption Expenditure (PCE) Price Index inflation comes just ahead of the Trump administration's self-imposed tariff deadline of April 2.

Canadian Dollar price forecast

The Canadian Dollar's Thursday walkback saw the Loonie shed some 45 pips against the US Dollar. Market flows continue to favor the Greenback on a near-term basis as risk-off flows begin to ramp up.

USD/CAD remains pinned to the 50-day Exponential Moving Average (EMA) near 1.4320 as near-term momentum continues to grind sideways. The pair has remained trapped in a choppy sideways channel as the congestion grind that started four months ago continues unabated.

USD/CAD daily chart

Canadian Dollar FAQs

The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada's largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada's exports versus its imports. Other factors include market sentiment - whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) - with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.

The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.

The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada's biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.

While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada's case is the Canadian Dollar.

Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.

 


Date

Created

 : 2025.03.28

Update

Last updated

 : 2025.03.28

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

EUR/USD looks to build on recovery from multi-week low; holds steady below mid-1.0800s

The EUR/USD pair attracts some dip-buyers following an Asian session dip to the 1.0800 neighborhood and looks to build on its bounce from a multi-week low touched last Thursday.
New
update2025.03.31 09:48

Gold Price Forecast: XAU/USD rises to near record high below $3,100 amid global uncertainty

The Gold price (XAU/USD) gains momentum to around $3,090 during the early Asian session on Monday.
New
update2025.03.31 09:18

US President Donald Trump weighs broader, higher tariffs - WSJ

US President Donald Trump's administration is hurrying to determine the specifics of its new tariff agenda ahead of its self-imposed deadline of Wednesday, considering possibilities after promising to remake the American economy with a slew of new levies, the WSJ citing unnamed sources.
New
update2025.03.31 08:50

US President Donald Trump threatens tariffs on Russian oil if Moscow blocks Ukraine deal

US President Donald Trump said on Sunday that he was "pissed off" at Russian President Vladimir Putin and would impose secondary tariffs of 25% to 50% on buyers of Russian oil if he feels Moscow is blocking his efforts to end the war in Ukraine.
New
update2025.03.31 08:30

AUD/USD edges lower below 0.6300 on global trade concerns

The AUD/USD pair trades in negative territory near 0.6280 during the early Asian session on Monday.
New
update2025.03.31 08:12

China to inject $69 billion into four big banks to strengthen the financial sector

China's finance ministry will inject 500 billion yuan ($69 billion) into four of the nation's largest state banks, following through on Beijing's earlier effort to strengthen the financial sector, per Bloomberg.
New
update2025.03.31 07:38

AUD/JPY Price Analysis: Drops toward 94.20 area as bearish pressure mounts

The AUD/JPY pair extended its decline on Friday, hovering near the 94.30 zone after the European session and slipping closer to the lower end of its intraday range.
update2025.03.29 06:39

Australian Dollar stuck near 0.6300 as PCE data fails to shift sentiment

The Australian Dollar (AUD) remains directionless during Friday's American session, with AUD/USD hovering around the 0.6300 zone.
update2025.03.29 05:57

Canadian Dollar roils as Trump reiterates tariff threats

The Canadian Dollar was dragged in both directions on Friday, rising and then falling as market flows clash with fresh threats of tariffs on Canada from US President Donald Trump.
update2025.03.29 05:22

Silver Price Forecast: XAG/USD pulls back from 5-month peak, bears eye $34

Silver price hits a five-month high but retreats toward the $34 figure late on Friday, as traders brace for the weekend, eyeing a busy economic schedule in the United States (US).
update2025.03.29 05:19

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel