USD/CAD collapses about 1,4100 while the US dollar sinks for recession risks in the US.

  • The USD/CAD collapses about 1,4100 while the US dollar faces a bloodbath.
  • Trump tariffs have fed the risks of an economic recession in the US.
  • Investors expect the US ISM services PMI and NFP data for March.

The USD/COD faces a strong mass sale and slides about 1,4100 during Thursday’s European negotiation hours. The Loonie pair weakens as the US dollar (USD) collapses after the publication of the reciprocal tariff plan by the president of the United States (USA), Donald Trump, Wednesday.

The US dollar index (DXY), which measures the value of the dollar against six main currencies, has dropped more than 2% to about 101.30.

Investors have discarded the US dollar since they have become increasingly confident that Trump’s tariffs will be unfavorable for the US economy.he Market experts believe that the worst tariffs expected by Trump have exposed the US economy to a recession. It is expected that Trump’s protectionist policies are inflationary to the US economy. Such scenario will reduce the purchasing power of households, which could affect the demand for lasting goods.

Looking ahead, the next trigger for the US dollar will be the US non -agricultural payroll data (NFP) for March, which will be published on Friday. In Thursday’s session, investors will focus on the data managers index (PMI) of ISM Services for March, which will be published at 14:00 GMT. It is estimated that the PMI of services has grown at a slower pace, from 53.5 in February to 53.0.

Meanwhile, the Canadian dollar (CAD) has a lower performance than its peers, despite the fact that Donald Trump has exempted Canada and Mexico from the 10% base tariffs that are applicable to all commercial partners. The 10% tariff would only enter into force when the original 25% tariffs that Trump imposed on Canadian and Mexican imports are finished or suspended.

US dollar FAQS


The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.


The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.


In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.


The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.

Source: Fx Street

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