USD/CAD falls sharply to near 1.3640 as Trump unveils fresh batch of tariffs for 14 nations.
The imposition of 25% tariffs on imports from Japan has weighed on the US Dollar.
Investors await FOMC minutes and Canadian labor market data.
The USD/CAD pair retraces to near 1.3640 during European trading hours on Tuesday. The Loonie pair corrects as the US Dollar (USD) gives up half of tariff-inspired gains made on Monday. The United States (US) currency faces selling pressure after President Donald Trump unveiled new additional duty rates for nations that fail to strike a deal during the 90-day tariff pause.
At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades lower around 97.35.
On Monday, Trump announces tariffs on 14 countries, out of which Japan and South Korea were notable, being leading trading partners of Washington. The White House imposed 25% tariffs on both nations, while Washington was negotiating with Tokyo consistently from past few weeks.
The resumption of global trade tensions has undermined the US Dollar, assuming that the burden of higher tariffs will be borne by US importers who would be forced to transfer to end consumers.
Meanwhile, investors await the release of the Federl Open Market Committee (FOMC) minutes of the June 14-18 policy meeting, which is scheduled for Wednesday. The FOMC minutes will provide a detailed explanation about reasons, which forced Federal Reserve (Fed) officials to hold interest rates in the range of 4.25%-4.50% for the fourth meeting in a row.
In Canada, investors await the labor market data for June, which will be released on Friday. Investors will pay close attention to the Canadian employment data as it will influence market expectations for the Bank of Canada’s (BoC) monetary policy outlook. The labor market report is expected to show that the employment activity remained subdued. The Unemployment Rate is seen accelerating to 7.1% from 7% in May.
Signs of further weakness in labor market conditions would prompt the BoC to cut interest rates further.
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