The USD/CAD pair trades cautiously near 1.4300 in Wednesday's European session amid concerns over potential 25% tariffs on Canada by US President Donald Trump. While Canadian Prime Minister Justin Trudeau has stated the government's readiness to respond, the Loonie remains under pressure. Investors anticipate a 25 basis point interest rate cut by the Bank of Canada later this month, fueling further divergence from the Federal Reserve's stance.
USD/CAD trades with caution around 1.4300 as Trump threatens 25% tariff hikes on Canada. Canada PM Trudeau reiterated that the government is prepared to respond to Trump’s tariffs if announced. Investors expect the BoC to cut interest rates by 25 bps later this month. The USD/CAD pair trades cautiously near 1.4300 in Wednesday’s European session.
Other factors include market sentiment – whether investors are taking on more risky assets or seeking safe-havens – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar. How do the decisions of the Bank of Canada impact the Canadian Dollar? The Bank of Canada has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another.
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