Select Language

USD/CAD trades higher near 1.3850 due to potential de-escalation of ongoing tariff dispute

blockHeadVisual
  1. HOME
  2. Get information
  3. World FX news
  4. USD/CAD trades higher near 1.3850 due to potential de-escalation of ongoing tariff dispute

World FX news

search
Breaking news

USD/CAD trades higher near 1.3850 due to potential de-escalation of ongoing tariff dispute

  • X
  • facebook
  • LINE
  • RSS
  • X
  • facebook
  • LINE
  • RSS
New update 2025.04.23 11:43
USD/CAD trades higher near 1.3850 due to potential de-escalation of ongoing tariff dispute

update 2025.04.23 11:43

  • USD/CAD gains as the US Dollar strengthens after Treasury Secretary Scott Bessent hinted at a potential de-escalation in trade tensions.
  • The White House also signaled progress in trade talks aimed at easing the broad tariffs introduced earlier this month.
  • The CAD found support from rising crude Oil prices, driven by sanctions on Iran and a decline in US stockpiles.

USD/CAD edges higher, rebounding from two consecutive sessions of losses, and is trading near 1.3830 during Asian hours on Wednesday. The US Dollar (USD) found support following remarks by US Treasury Secretary Scott Bessent, who called the ongoing tariff dispute "unsustainable," hinting at potential de-escalation.

On Tuesday, the White House announced progress in trade negotiations aimed at reducing the sweeping tariffs imposed earlier this month. Press Secretary Karoline Leavitt stated that 18 countries have already submitted trade proposals, with President Trump's team set to meet representatives from 34 nations this week to explore possible deals.

However, the USD/CAD pair rally may be limited as the Canadian Dollar (CAD), a commodity-linked currency, gains support from rising crude Oil prices. As the largest Oil exporter to the United States (US), Canada benefits from stronger Oil markets.

Crude prices continued to climb amid new sanctions on Iran, declining US crude inventories, and a more dovish tone from President Trump on the Federal Reserve. Markets also responded positively after Trump softened his stance on Fed Chair Jerome Powell and suggested possible tariff relief for China.

Investors anticipate the Bank of Canada (BoC) will maintain a neutral stance on its monetary policy outlook. The central bank left its benchmark interest rate unchanged at 2.75% last week. Attention now turns to Canada's February Retail Sales data, scheduled for release on Friday, which could offer further insight into the economic outlook.

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

 : 2025.04.23

Update

Last updated

 : 2025.04.23

Related articles

Show more

Writer

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?
No loading Yes loading

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.

Previous article

prev

Japanese Yen recovers a major part of early lost ground against USD

Next article

USD/INR attracts some buyers on Pahalgam terror attack

prev

Most viewed

EUR/INR today: Indian Rupee cross rates edge higher at the start of the European session

Indian Rupee (INR) crosses trade on the front foot at the beginning of Wednesday, according to FXStreet data.
New
update2025.04.23 17:34

UK Preliminary Services PMI contracts to 48.9 in April vs. 51.3 expected

·       UK Services PMI dipped to 48.9 in April, missing expectations.
New
update2025.04.23 17:31

AUD/JPY trades higher near 91.00 despite cautious remarks from Chinese Foreign Ministry

AUD/JPY snaps a three-day losing streak, trading around 90.90 during Wednesday's European session.
New
update2025.04.23 17:17

China SMEI: Moderation in April - Standard Chartered

Headline SMEI retreated to 50.4 in April as all key sub-indices edged down from March. IT and transport services performance sub-indices fell below 50; manufacturing SMEs outperformed.
New
update2025.04.23 17:11

Eurozone Preliminary Manufacturing PMI ticks up to 48.7 in April vs. 47.5 expected

The Eurozone manufacturing sector remained in contraction, while the service sector followed suit in April, according to data from the HCOB's latest Purchasing Managers' Index (PMI) Survey, published on Wednesday.
New
update2025.04.23 17:02

Palladium price today: Rare metals advance at the start of the European session

Platinum Group Metals (PGMs) trade with a positive tone at the beginning of Wednesday, according to FXStreet data.
New
update2025.04.23 17:01

S&P Global PMIs expected to confirm US economic pullback in April

This Wednesday, S&P Global will unveil its preliminary April Purchasing Managers' Indices (PMIs) for the United States, drawing on surveys of senior private sector executives to offer an early read on economic momentum.
New
update2025.04.23 17:00

Pound Sterling retraces against US Dollar as fears of global trade war, Powell's removal diminish

The Pound Sterling (GBP) recovers some of its initial losses against the US Dollar (USD) in Wednesday's European session, still trading lower in the day around 1.3300. The GBP/USD pair pares some intraday losses as the US Dollar (USD) retraces after a sharp upside move on Wednesday.
New
update2025.04.23 16:53

Crude Oil price today: WTI price bullish at European opening

West Texas Intermediate (WTI) Oil price advances on Wednesday, early in the European session. WTI trades at $64.53 per barrel, up from Tuesday's close at $63.36.
New
update2025.04.23 16:36

German Preliminary Manufacturing PMI declines to 48 in April vs. 47.6 expected

·       Germany's Manufacturing PMI dropped to 48 in April vs. 47.6 forecast.
New
update2025.04.23 16:31

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.

arw
  • 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
Line

Line
Facebook

Facebook
X

Twitter
Cancel