FX.co ★ Toxifire | USD/CAD

The Canadian dollar experienced a volatile trading session on Friday, exhibiting both upward and downward swings as market forces clashed with the looming threat of new tariffs imposed by US President Donald Trump. A prevailing sense of uncertainty gripped the market as the Trump administration approached its self-imposed April 2nd deadline, yet remained reticent in providing concrete details regarding a series of constantly evolving tariff measures. This lack of clarity contributed to a weakening of market sentiment. Adding to the market's complexity, the release of robust US economic data on Friday presented a mixed picture. The US core personal consumption price index (PCI) inflation rate for February indicated an increase, dampening expectations for imminent interest rate cuts while simultaneously signaling the potential for inflation to remain above target for an extended period. Simultaneously, US consumer confidence witnessed a decline, reflecting growing unease among consumers regarding the Trump administration's economic management, particularly in the realm of international trade.

President Trump's recent proclamation, which imposed a 25% tariff on auto imports and threatened further sanctions against the European Union and Canada should they retaliate, significantly impacted the Canadian dollar. Given that approximately 75% of Canada's exports, including crucial commodities like oil and automobiles, are destined for the United States, this development exerted considerable downward pressure on the Canadian currency. The anticipation of Trump's "tit-for-tat" tariffs, even before their official implementation on April 2nd, had already fostered an environment of deteriorating trade relations between the US and its major trading partners. Further economic data released by the Bureau of Economic Analysis revealed that the US economy grew at an annualized rate of 2.4% in the final quarter of 2024, driven by a sustained surge in consumer spending. This performance slightly exceeded previous forecasts. However, the overall economic outlook has become increasingly clouded by Trump's trade policies, which threaten to escalate inflation and impede economic growth. Consequently, this potential economic slowdown could generate selling pressure on the USD/CAD pair. The delicate balance between economic data and trade tensions is creating a highly volatile market for