- USD/CAD strengthens as momentum grows among Trump advisers to impose 25% tariffs on Canada, potentially as early as February 1.
- CAD also struggles as BoC expected to implement another 25 basis point rate cut on Wednesday
- The US dollar gains ground amid uncertainty over the impact of President Trump’s policies.
USD/CAD recovers its losses from the previous two sessions, trading around 1.4390 during Asian hours on Monday. This rise in the pair is attributed to the growing push among US President Donald Trump’s advisors to impose 25% tariffs on Mexico and Canada starting February 1.
In an exclusive story, the Wall Street Journal (WSJ) reported early Monday that Trump’s advisers do not want to wait for any negotiations or talks. An unnamed ‘senior administration official’ in the report said Trump is willing to act quickly, citing the president’s imposition of tariffs on Colombia.
Additionally, the Canadian Dollar (CAD) faces pressure as the Bank of Canada (BoC) is expected to implement another quarter-point rate cut on Wednesday, while the Federal Reserve is widely anticipated to keep interest rates steady. during the first half of the year, further widening the interest rate differential.
The US dollar gains ground due to uncertainty over the impact of US President Donald Trump’s trade, which could support the Federal Reserve’s (Fed) cautious approach to cutting interest rates this year.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, is recovering from its monthly low of 107.22, reached on Friday. The DXY is trading near 107.60 at the time of writing.
Data released by S&P Global on Friday showed the US Composite PMI fell to 52.4 in January from 55.4 in December. Meanwhile, the manufacturing PMI improved to 50.1 in January from 49.4 previously, beating the estimate of 49.6. The services PMI fell to 52.8 in January from 56.8 in December, below the market consensus of 56.5.
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.
