USD/CAD declines as concerns over slowing economic growth and the impact of newly imposed tariffs weigh on market sentiment.
US Commerce Secretary Howard Lutnick indicated that Trump might reconsider his tariff policy less than 48 hours after its implementation.
The Canadian Dollar faces headwinds amid rising expectations of additional interest rate cuts from the Bank of Canada.
The USD/CAD pair continues to decline for the second straight session, hovering around 1.4400 during early European trading hours on Wednesday. The US Dollar (USD) remains under pressure amid rising concerns over slowing economic growth and the impact of newly imposed tariffs. President Trump’s 25% tariffs on Canadian and Mexican goods took effect on Tuesday, alongside a hike in duties on Chinese imports to 20%.
US Commerce Secretary Howard Lutnick suggested in a Fox News interview that Trump may reconsider the tariff policy less than 48 hours after its implementation, indicating potential relief if USMCA rules are followed. However, the New York Times reported that Trump has privately expressed his intent to keep the tariffs in place.
The US Dollar Index (DXY), which measures the Greenback against six major currencies, remains around 105.70. Market sentiment weighs on the USD amid speculation that Trump could soften his stance on tariffs. Investors now turn their focus to key US economic data, including the ISM Services PMI and ADP Employment Change, set for release in the North American session.
Meanwhile, the Canadian Dollar (CAD) faces downside risks, limiting further losses in the USD/CAD pair, as growing expectations of additional interest rate cuts from the Bank of Canada (BoC). According to Reuters, markets have priced in an 80% probability of a BoC rate cut next week. BMO Chief Economist Douglas Porter stated, "We now expect the quarter-point pace to continue over the next four meetings until July, bringing the rate to 2.0%."
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