USD/CAD posts modest gains above 1.4300, eyes on US PCE release

• USD/CAD trades with mild gains around 1.4310 in Thursday's late American session. 
• Trump placed a 25% tariff on imported cars and light trucks, which will take effect on April 2. 
• US GDP grew at a 2.4% annualized rate in the October-to-December period.

The USD/CAD pair posts modest gains near 1.4310 during the late American session on Thursday. The Canadian Dollar (CAD) weakens after US President Donald Trump announced auto trade levies, widening the global trade war. Investors await the release of the US Personal Consumption Expenditures Price Index (PCE), which is due later on Friday. 

Trump on Wednesday signed a proclamation to implement a 25% tariff on auto imports and pledged harsher punishment on the EU and Canada if they join forces against the US. This development undermines the Loonie and acts as a tailwind for the pair as Canada sends about 75% of its exports to the United States, including oil and autos. Trump's aggressive trade measures look certain to worsen relations with major trading partners, even before his planned so-called reciprocal tariffs on April 2.

The US economy expanded at an annual 2.4% pace in the final three months of 2024, supported by a year-end surge in consumer spending, the third release of the figures from the Bureau of Economic Analysis showed Thursday. This figure came in slightly better than the previous estimate of fourth-quarter growth. However, the outlook is cloudier as Trump's trade policies could push up inflation and hurt growth. This, in turn, might exert some selling pressure on the Greenback against the CAD.