USD/CAD holds steady above 1.4250 on tariff and election uncertainty

USD/CAD trades on a flat note around 1.4275 in Tuesday’s late American session.

Concerns over US tariffs and the upcoming Canadian election could weigh on the Loonie. 

Higher Crude Oil prices could help limit the CAD’s losses. 

The USD/CAD pair flat lines around 1.4275 during the late American session on Tuesday. The Canadian Dollar (CAD) pares gains against the US Dollar (USD) amid uncertainty around the Canadian general election and expected new US trade tariffs on April 2.

With Canadian elections approaching, the ruling Liberal Party and the official opposition Conservatives were effectively tied in polls conducted just before the campaign started on Sunday.

Analysts from Bannockburn Global Forex noted the impact of the election outcome and potential US tariffs, particularly after US President Donald Trump signaled that automobile tariffs are coming soon, while hinting that not all of his threatened levies would be imposed on April 2 and some countries may get breaks. Tariff and election uncertainty are likely to undermine the CAD in the near term. 

On the other hand, a rise in Crude Oil prices might lift the commodity-linked Loonie and act as a headwind for USD/CAD. It’s worth noting that Canada is the largest oil exporter to the United States (US), and higher crude oil prices tend to have a positive impact on the CAD value. 

On the USD’s front, speculation of an economic slowdown in the US economy could drag the Greenback lower. “The narrative seems to be shifting more toward the fact that tariffs are going to impact growth more than inflation,” said Vinny Bleau, director of fixed-income capital markets at Raymond James in Memphis, Tennessee.