Usdcad Under Pressure

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Usdcad Under Pressure

Usd/Cad Under Pressure Amid Trade Tariffs - Scotiabank

The CAD is under pressure due to the ongoing trade tension between the USA and Canada. Although the tariffs are postponed or suspended briefly, there's always a chance that Trump will impose them again.

Initially, President Trump had put a 25% tariff on all the exports of Canada coming to the USA. In addition, 10 tariffs were applied to the energy products of Canada.

Boc To Continue With Policy Easing

According to Scotiabank, the key reason why USD/CAD is under pressure is due to the ongoing trade wars. In addition, one of the biggest items in Trump's toolbox is the tariffs.

Also, any type of retaliation from Canada could lead to more counter-tariffs and so on. Meanwhile, the BoC is expected to continue the easing policy as the growth appears to be stalling.

Looking ahead, Scotiabank believes that there is a greater risk of more weakening in the Canadian Dollar. Also, we don't really know the full plans of Mr. Trump for the Canadian exports.

On average, Trump could impose a 20% tariff on Canadian products if things go wrong. In that case, the most probable range for the USD/CAD will be 1.50 - 1.55.

There's no doubt that a great deal of uncertainty is surrounding the CAD and it all comes down to tariffs. If Trump goes ahead with new tariffs, will Canada respond? In case of a response, how the US government will respond? All of these are important questions and can effect the value of USD/CAD.

In the short term, the US Dollar appears to be catching its breath after reaching a high of 1.48. Also, the recent upside has led to the intraday gap, which could be a reason for the market to move back into that region.

The long-term trend clearly shows that the dominant force will be the USD in the USD/CAD pair. This means we can expect more upside in USD/CAD during the next quarters of 2025.

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