Canadian Dollar gains ground on Thursday as tariff complexity deepens

• The Canadian Dollar rose against the US Dollar on Thursday.
• President Trump's tariffs have been knocked down by federal courts, at least for now.
• Canadian Current Account figures came in higher than expected ahead of key GDP, inflation figures.

The Canadian Dollar (CAD) found some room to the high side on Thursday, gaining ground against the Greenback as broad-market flows pull back from the US Dollar (USD). United States (US) President Donald Trump's long-running trade approach, which involved threatening and then mostly canceling tariffs, hit a hard wall on Wednesday after federal judges in the US Court of International Trade (USCIT) struck down the Trump administration's misuse of the International Emergency Economic Powers Act (IEEPA) to impose sweeping import taxes globally.

The Canadian Current Account trade balance fell less than expected in the first quarter, with a widening of the goods and services trade deficit offset by more direct investment than analysts had expected. Much of Canadian trade saw a flurry of money flowing in both directions as firms spent the first quarter stockpiling resources or selling off excess inventory ahead of the Trump administration's "reciprocal" tariff package, unveiled on April 2.

Daily digest market movers: Canadian Dollar catches a bid on Greenback weakness

• The Canadian Dollar gained one-quarter of one percent against the US Dollar on Thursday, but remains firmly within near-term technical ranges.
• US federal judges knocked down the Trump's administration's use of the IEEPA to impose across-the-board tariffs, stating that the White House's interpretation of the law runs afoul of its bounds.
• The Trump administration is expected to rush the appeals process to bring the case before the Supreme Court, which has a history of ruling in favor of President Trump.
• Ongoing political turmoil has investors balking at the prospect of continued uncertainty regarding trade policy. Markets are also waiting to see what legal mechanisms the Trump administration will attempt to deploy to circumvent the USCIT.
• Canada's Q1 Current Account shrank by $2.1B in Q1 2025 versus the expected $-3.25B contraction.
• According to StatsCan, direct investment inflows helped to offset some of the goods and services trade balance:
• Physical imports rose 5.3% QoQ, hitting a record quarterly high of $212B, much of it focused on automotive vehicles, auto parts, and industrial machinery.
• Physical exports also rose 5.3% QoQ, concentrated in automotives and parts, energy, and industrial equipment.
• Services imports and exports both declined as firms spent the first quarter focused on getting in front of the Trump administration's tariffs.
• An overall widening of the trade deficit was offset by record foreign investment, with Canadian investors picking up over $36.5B in foreign bonds and equities.

Canadian Dollar price forecast

The Canadian Dollar caught and intraday bid against the Greenback on Thursday, but the Loonie remains caught on the wrong end of a near-term pullback against the US Dollar. The USD/CAD pair remains trapped in a back-and-forth spin cycle around the 1.3800 handle, though the pair is still following a downside channel as the US Dollar steadily loses ground against the Loonie from two-decade highs posted in February.

USD/CAD daily chart