- USD/CAD rises to a new multi-year high in reaction to Trump’s comments on tariffs.
- A modest USD recovery from a two-week low contributes to the strong move higher.
- Falling US bond yields cap USD and pair amid rally in oil prices.
- Traders also seem reluctant and choose to wait for the crucial Canadian CPI report.
The USD/CAD pair trims some of the strong intraday gains to the highest level since March 2020 and trades around the 1.4440-1.4435 area during the early European session on Tuesday, still up 0.90% on the day.
The Canadian Dollar (CAD) came under heavy selling pressure after US President Donald Trump indicated plans to impose 25% tariffs on imports from Canada and Mexico starting in early February . The US dollar (USD), on the other hand, is experiencing a modest recovery after falling overnight to a two-week low amid expectations that Trump’s protectionist policies would boost inflation and force the Federal Reserve (Fed) to Maintain your hardline stance. This, in turn, lifts the USD/CAD pair beyond the psychological 1.4500 mark, although a combination of factors limits any further gains.
Investors are betting the Fed will cut borrowing costs twice before the end of the year amid signs of easing inflation in the US. This leads to a further sharp drop in US Treasury yields. .US, which, together with a generally positive tone around the stock markets, limits the gains of the Dollar as a safe haven. In addition to this, the emergence of some buying around crude oil prices benefits the commodity-linked Loonie and helps limit the USD/CAD pair. Traders also appear reluctant, opting to wait for the release of Canada’s latest consumer inflation figures later today.
The crucial Canadian Consumer Price Index (CPI) report will play a key role in influencing the Bank of Canada’s (BoC) interest rate outlook, which will, in turn, boost the domestic currency and provide a boost significant to the USD/CAD pair. Meanwhile, there is no relevant market-moving economic data scheduled for release in the US, leaving the USD at the mercy of US bond yields and overall risk sentiment.
economic indicator
Consumer Price Index (YoY)
Statistics Canada is the entity in charge of publishing the consumer price index, which is a measure of price movement through the comparison between the prices of retail sales of a basket of representative goods and services. The purchasing power of the Canadian dollar is reduced by inflation. He Bank of Canada targets an inflation range (1% – 3%). A high reading would anticipate an increase in interest rates and is bullish for the Canadian dollar.
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Frequency:
Monthly
Dear:
1.8%
Previous:
1.9%
Fountain:
Statistics Canada
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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.