- USD/CAD becomes weaker when the US dollar decreases during the Treasury Department.
- Global trade voltage escalates after President Donald Trump announces 25% tariffs on automobile imports.
- Canadian Prime Minister Mark Carney has condemned US tariffs and called it a direct attack on workers in the automotive sector.
USD/CAD remains under pressure for the fourth straight day, fluctuating around 1.4260 during Asian trading hours on Thursday. The pair faces downward pressure as the US Dollar (USD) weakens alongside a decline in Treasury yields.
US Dollar Retreats as Treasury Yields Decline
The US Dollar Index (DXY), which measures the USD against a basket of six major currencies, is pulling back from recent gains, hovering around 104.30. Meanwhile, US Treasury yields are also trending lower, with the 2-year note yielding 4.0% and the 10-year note at 4.35% at the time of writing.
Market Awaits Key US Economic Data Releases
Investors are closely monitoring upcoming US economic reports, which could influence market sentiment. Key data scheduled for release later in the day include the weekly Initial Jobless Claims and the final Q4 Gross Domestic Product (GDP) Annualized report. Additionally, traders are anticipating Friday’s release of the Personal Consumption Expenditures (PCE) report, the Federal Reserve’s preferred inflation measure, for further policy guidance.
US Auto Tariffs and Canadian Dollar Outlook
Despite the pressure on USD/CAD, the pair’s downside could be limited due to potential challenges for the Canadian Dollar (CAD) following new US trade measures. On Wednesday, US President Donald Trump signed an executive order imposing a 25% tariff on auto imports, set to take effect on April 2, with collections starting the following day. A one-month exemption will apply to auto parts imports.
However, parts originating from Canada and Mexico that comply with the United States-Mexico-Canada Agreement (USMCA) will remain exempt until US Customs and Border Protection implements a system to enforce tariffs on non-US parts, according to an official White House statement.
Canadian Government’s Response to New Tariffs
Canadian Prime Minister Mark Carney has strongly criticized the tariffs, calling them a “direct attack” on auto sector workers. In response, he is expected to return to Ottawa to coordinate a government strategy with his cabinet, according to reports from CNN Business.
