USD/CAD attracts some sellers to around 1.4400 in Tuesday’s late American session, down 0.50% on the day.
Lutnick said Trump may roll back Canada and Mexico tariffs on Wednesday.
The BoC is expected to cut its interest rate further next week.
The USD/CAD pair extends the decline to near 1.4400 during the late American session on Tuesday. The US Dollar (USD) fell against the Canadian Dollar (CAD) amid concerns about slowing growth and the impact of tariffs on the US economy outweighed any potential boost from new levies on Canada, China and Mexico.
President Donald Trump's 25% tariffs on goods from Canada and Mexico took effect Tuesday, along with a doubling of duties on Chinese goods to 20%. However, US Commerce Secretary Howard Lutnick hinted that Trump may be preparing to pivot on his own tariffs less than 48 hours after imposing them. Investors will closely monitor the developments surrounding further tariff policies, which might trigger the volatility in the major pair.
The rising bets on further interest rate cuts from the Bank of Canada (BoC) might drag the Loonie lower and act as a tailwind for the pair. Investors have priced in roughly 80% odds that the BoC will cut interest rates further next week, according to Reuters. "We now look for the quarter-point pace to continue in each of the next four meetings until July, taking the rate to 2.0 per cent,” said BMO chief economist Douglas Porter.
Meanwhile, a decline in crude oil prices on reports that OPEC+ will proceed with a planned oil output increase in April might weigh on the commodity-linked Loonie. It’s worth noting that Canada is the largest oil exporter to the United States (US), and lower crude oil prices tend to have a negative impact on the CAD value.
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