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The USD/CAD currency pair has climbed above the 1.3800 mark, settling near 1.3855 during Tuesday’s North American trading session. This uptick is driven by a steadier US Dollar, buoyed by growing optimism surrounding a potential de-escalation in the US-China trade war. Investors are responding to positive signals, including Beijing’s decision to waive additional tariffs on US ethane imports and hopes of tariff relief on certain auto imports by Washington, which have lent support to the Canadian Dollar.
Beijing’s move to eliminate the 125% tariff on US ethane imports, reported by Reuters, marks a significant step toward easing trade tensions. China, a major buyer of nearly half of US ethane exports according to the Energy Information Administration, appears to be signaling a willingness to improve relations. This development aligns with broader market expectations that both the US and China, heavily reliant on each other for critical inputs, will need to scale back their steep tariffs to sustain economic stability. US Treasury Secretary Scott Bessent has echoed this sentiment, calling the current high tariffs “unsustainable” while urging China to kickstart trade negotiations, keeping hopes for a resolution cautiously alive.
On the Canadian front, the Loonie has found some relief from reports that President Donald Trump may announce tariff exemptions on specific auto parts used in US car manufacturing. As Canada is a leading auto exporter to the US, this news, reported by Bloomberg, has bolstered the Canadian Dollar. Meanwhile, the US Dollar Index (DXY), which measures the Greenback against six major currencies, edged higher to around 99.10, reflecting renewed confidence in the US currency.
Economic data also played a role in market dynamics. The US JOLTS Job Openings report for March disappointed, with employers posting 7.19 million jobs compared to expectations of 7.5 million and February’s 7.48 million. In Canada, attention is shifting to Wednesday’s release of February’s Gross Domestic Product (GDP) data, expected to show no growth after January’s 0.4% expansion. As investors await further economic cues, the USD/CAD pair’s trajectory will likely hinge on developments in trade talks and upcoming data releases, with both nations’ economic interdependence keeping markets on edge.
