The USD/CAD exchange rate rises to a new multi-year high in response to Trump's tariff comments.
The strong increase is a result of the USD's modest recovery from a two-week low.
As oil prices rise, declining US bond yields limit the USD and the pair.
Additionally, traders appear hesitant and choose to hold off until the important Canadian CPI report is released.
During the early European session on Tuesday, the USD/CAD pair trades around the 1.4440-1.4435 area, still up 0.90% for the day, after trimming a portion of its strong intraday gains to the highest level since March 2020.
After US President Donald Trump announced plans to impose 25% tariffs on imports from Canada and Mexico as early as early February, the Canadian dollar (CAD) experienced significant selling pressure. However, amid fears that Trump's protectionist policies would increase inflation and pressure the Federal Reserve (Fed) to maintain its hawkish stance, the US dollar (USD) recovers somewhat from its overnight plunge to a two-week low. As a result, the USD/CAD pair rises above the psychological 1.4500 level, but a number of factors limit any additional gains.
Amid indications that US inflation is slowing, investors are placing bets that the Fed will cut borrowing costs twice by the end of this year. Together with an overall upbeat mood in the equity markets, this causes the yields on US Treasury bonds to drop even more sharply, limiting gains for the safe-haven currency. In addition, the commodity-linked Loonie is supported by the emergence of some buying around crude oil prices, which also helps to control the USD/CAD pair. Additionally, traders appear hesitant and choose to hold off until later today when Canada releases its most recent consumer inflation data.
The Bank of Canada's (BoC) interest rate outlook will be heavily influenced by the important Canadian Consumer Price Index (CPI) report. This will drive the domestic currency and give the USD/CAD pair some significant momentum. The USD is now vulnerable to US bond yields and the general risk sentiment since the US is not expected to release any pertinent market-moving economic data.
The strong increase is a result of the USD's modest recovery from a two-week low.
As oil prices rise, declining US bond yields limit the USD and the pair.
Additionally, traders appear hesitant and choose to hold off until the important Canadian CPI report is released.
During the early European session on Tuesday, the USD/CAD pair trades around the 1.4440-1.4435 area, still up 0.90% for the day, after trimming a portion of its strong intraday gains to the highest level since March 2020.
After US President Donald Trump announced plans to impose 25% tariffs on imports from Canada and Mexico as early as early February, the Canadian dollar (CAD) experienced significant selling pressure. However, amid fears that Trump's protectionist policies would increase inflation and pressure the Federal Reserve (Fed) to maintain its hawkish stance, the US dollar (USD) recovers somewhat from its overnight plunge to a two-week low. As a result, the USD/CAD pair rises above the psychological 1.4500 level, but a number of factors limit any additional gains.
Amid indications that US inflation is slowing, investors are placing bets that the Fed will cut borrowing costs twice by the end of this year. Together with an overall upbeat mood in the equity markets, this causes the yields on US Treasury bonds to drop even more sharply, limiting gains for the safe-haven currency. In addition, the commodity-linked Loonie is supported by the emergence of some buying around crude oil prices, which also helps to control the USD/CAD pair. Additionally, traders appear hesitant and choose to hold off until later today when Canada releases its most recent consumer inflation data.
The Bank of Canada's (BoC) interest rate outlook will be heavily influenced by the important Canadian Consumer Price Index (CPI) report. This will drive the domestic currency and give the USD/CAD pair some significant momentum. The USD is now vulnerable to US bond yields and the general risk sentiment since the US is not expected to release any pertinent market-moving economic data.
