- The USD/CAD fights above 1,4400 while US President Trump postpone his 25% tariff orders over Canada and Mexico.
- The Boc sees the risk of inflation being less than its 2%target.
- Investors expect the US Jolts employment offers data for December.
The USD/CAD torque quotes around 1,4430 in the European session on Tuesday. The Loonie torque is almost 2.6% below its maximum of Monday of 1,4800, since the Canadian dollar (CAD) is strengthened after the president of the United States (USA), Donald Trump, postponed his order to impose 25% tariffs on Canada and Mexico.
President Trump decided to delay tariff plans for 30 days after his American peers agreed to harden the restrictions at his borders through which illegal and fentanyl immigrants were entering the US. This scenario has resulted in a strong increase in attractive of the Canadian dollar (CAD).
The event has also indicated that Trump is using the tariff tool to gain advantage in negotiations with its business partners and close better agreements. The scenario has offered great relief to the Canadian dollar in the short term, but its long -term perspective remains uncertain due to the growing fears that inflation in Canada will be less than the 2% target of the Canada Bank (BOC).
Investors hope that the BOC will reduce interest rates at 25 basic points (BPS) up to 2.75% at the March monetary policy meeting.
Meanwhile, the US dollar (USD) has weakened since Trump’s decision to postpone tariffs to Canada and Mexico has decreased its appeal as a safe refuge. The American dollar index (DXY), which follows the value of the dollar against six main currencies, struggles to gain ground about the minimum of Monday of 108.40.
In the Economic Front, investors will focus on US Jolts job offers data for December, which will be published at 15:00 GMT. Economists expect employers to have published 8 million new jobs, slightly below the almost 8.10 million in November.
Canadian dollar faqs
The key factors that determine the contribution of the Canadian dollar (CAD) are the level of interest rates set by the Canada Bank (BOC), the price of oil, the main export product of Canada, the health of its economy, Inflation and trade balance, which is the difference between the value of Canadian exports and that of their imports. Other factors are market confidence, that is, if investors bet on riskier assets (Risk-on) or seek safe assets (Risk-Off), being the positive risk-on CAD. As its largest commercial partner, the health of the US economy is also a key factor that influences the Canadian dollar.
The Canada Bank (BOC) exerts a significant influence on the Canadian dollar by setting the level of interest rates that banks can provide with each other. This influences the level of interest rates for everyone. The main objective of the BOC is to maintain inflation between 1% and 3% by adjusting interest rates to the loss. Relatively high interest rates are usually positive for CAD. The Bank of Canada can also use quantitative relaxation and hardening to influence credit conditions, being the first refusal for CAD and the second positive for CAD.
The price of oil is a key factor that influences the value of the Canadian dollar. Oil is the largest export in Canada, so the price of oil tends to have an immediate impact on the value of the CAD. Generally, if the price of oil rises, the CAD also rises, since the aggregate demand of the currency increases. The opposite occurs if the price of oil drops. The highest prices of oil also tend to give rise to a greater probability of a positive commercial balance, which also supports the CAD.
Although traditionally it has always been considered that inflation is a negative factor for a currency, since it reduces the value of money, the opposite has actually happened in modern times, with the relaxation of cross -border capital controls. Higher inflation usually leads to central banks to raise interest rates, which attracts more capital of world investors who are looking for a lucrative place to save their money. This increases the demand for the local currency, which in the case of Canada is the Canadian dollar.
The published macroeconomic data measure the health of the economy and can have an impact on the Canadian dollar. Indicators such as GDP, manufacturing and services PMIs, employment and consumer confidence surveys can influence the CAD direction. A strong economy is good for the Canadian dollar. Not only attracts more foreign investment, but it can encourage the Bank of Canada to raise interest rates, which translates into a stronger currency. However, if the economic data is weak, the CAD is likely to fall.
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.