Canadian Dollar slams back into familiar territory as markets recover

• The Canadian Dollar recovered a steep 1.55% on Tuesday.
• US threats of tariffs on Canadian goods have evaporated.
• US NFP and Canadian labor figures loom ahead late in the week.

The Canadian Dollar (CAD) surged on Tuesday after market sentiment recovered from a bout of tariff fears, sending the Canadian Dollar just high enough to crash back into familiar consolidation territory after a brief test of two-decade lows. 

A stiff 25% tariff on all Canadian goods and a 10% import fee on Canadian energy products was waved off for 30 days by US President Donald Trump on Monday. The US has agreed to temporarily suspend its plans to tax its own citizens for demanding Canadian-made goods, which includes approximately 60% of all US-consumed fuel and roughly 40% of all vehicles purchased. With a third kick of the can on President Trump’s tariffs, investors will likely view any further threats of import tariffs as simply a strongarm measure for Donald Trump to secure concessions from key trade allies with the US, most of which were already agreed to with the previous US administration.

Daily digest market movers: Canadian Dollar recovers ground post-tariff rout

• The Canadian Dollar rebounded 1.55%, sending USD/CAD back into consolidation range.
• US trade tariffs on Canada have been waived for 30 days.
• Investors are likely to disregard future tariff threats as pure posturing, limiting their effectiveness in the future.
• Canadian labor figures are due later this week, slated for Friday. The Canadian Unemployment Rate is expected to tick higher to 6.8% from 6.7%, and the Net Change in Employment is expected to ease to 25K from 90.9K in January.
• Canadian labor prints are likely to be entirely overshadows by US Nonfarm Payrolls figures due at the same time. US NFP net job gains are expected to ease to 170K from 256K, and back-dated revisions are also expected.

Canadian Dollar price forecast

The Canadian Dollar’s crash-and-bounce sent USD/CAD briefly to two-decade highs near 1.4800 before correcting sharply back below the 1.4400 handle on Tuesday. Despite firm gains behind the Loonie, Tuesday’s correction was only enough to plant USD/CAD back into its recent consolidation range between 1.4300 and 1.4500.

Price action continues to grind into a familiar pattern, albeit with quick spikes in either direction as the pair muddles along the midrange.

USD/CAD daily chart