CFD Trading Rate US Dollar vs Canadian Dollar (USDCAD)

The Bank of Canada (BOC) delivered on expectations yesterday and cut the policy 25bps to 2.75%. The BOC warned that the pervasive uncertainty created by continuously changing US tariff threats is restraining consumers’ spending intentions and businesses’ plans to hire and invest, BBH FX analysts report. 

BOC to bring down the policy rate below neutral settings

"As such, unless the trade dispute is fully resolved, the BOC will likely bring down the policy rate below neutral settings which is a drag on CAD. The BOC’s neutral range estimate is between 2.25% to 3.25%. The April Monetary Policy Report will include an update to that estimate. Markets imply an additional 75bps of easing over the next 12 months and the policy rate to bottom at 2.00%."

"BOC Governor Tiff Macklem confirmed there was no consideration for a 50bps rate cut. Instead, Macklem’s opening statement stressed 'Governing Council will proceed carefully with any further changes to our policy rate given the need to assess both the upward pressures on inflation from higher costs and the downward pressures from weaker demand'."

• USD/CAD struggles to gain ground even though the US Dollar steadies on US President Trump's tariff agenda.
• The BoC cut its key borrowing rates by 25 bps to 2.75% on Wednesday.
• Trump tariffs have prompted Canadian economic risks.

The USD/CAD pair trades with caution around 1.4360 in Thursday’s European session. The Loonie pair faces mild pressure even though the US Dollar has gotten temporary relief after refreshing the four-month low, indicating some strength in the Canadian Dollar (CAD).

The CAD gained sharply after the Bank of Canada (BoC) reduced interest rates by 25 basis points (bps) to 2.75% on Wednesday. The BoC was already expected to ease the monetary policy further as Canadian inflation has remained well below the 2% target in the November-January period.

For fresh cues on inflation, investors will focus on the Consumer Price Index (CPI) data for February, which will be published on Tuesday.

The comments from BoC Governor Tiff Macklem indicated that central bank monetary policy has reached to the neutral level, which neither restrict nor stimulate domestic growth. “Our estimate of neutral is centred on 2.75%,” Macklem said in the press conference.

The BoC warned that heightened “trade tensions” could disrupt “job market recovery”, increase “increase inflationary pressures and curb growth” and guided a moderate growth in the January-March period as trade conflict weighs on “sentiment and activity”.

Meanwhile, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, strives to gain ground after posting a fresh four-month low around 103.20. The USD Index steadies as the market sentiment turns cautious after United States (US) President Donald Trump threatened to respond to counter tariffs proposed by the European Commission (EC).

In Thursday’s session, investors will focus on the US Producer Price Index (PPI) data for February, which will be published at 12:30 GMT.

• USD/CAD regains positive traction and draws support from a combination of factors. 
• Fed rate cut bets continue to undermine the USD and cap the upside for the major.
• The mixed technical setup warrants caution before placing aggressive directional bets.

The USD/CAD pair attracts some dip-buyers in the vicinity of mid-1.4300s during the Asian session on Thursday and reverses a part of the previous day's losses. Spot prices climb to the 1.4400 neighborhood in the last hour, though a combination of factors might keep a lid on any meaningful upside. 

The Canadian Dollar (CAD) continues to be weighed down by the Bank of Canada's (BoC) seventh consecutive interest rate cut on Wednesday and the escalating US-Canada trade war. Apart from this, the lack of follow-through buying around Crude Oil prices undermines the commodity-linked Loonie and acts as a tailwind for the USD/CAD pair. However, the underlying bearish tone around the US Dollar (USD), amid bets that the Federal Reserve (Fed) will cut rates several times this year, caps the upside for the currency pair. 

From a technical perspective, the USD/CAD pair, so far, has been struggling to find acceptance above the 1.4500 psychological mark and the subsequent slide warrants caution for bullish traders. That said, positive oscillators on the daily chart suggest that any further decline is likely to find decent support near the 100-period Simple Moving Average (SMA) on the 4-hour chart, currently pegged around the 1.4345 area. A sustained break below, however, might prompt aggressive selling and pave the way for deeper losses.

The USD/CAD pair might then weaken further below the 100-day SMA, around the 1.4215 area, the 1.4200 mark, towards testing the year-to-date low, around the 1.4150 region set on February 14. Spot prices could eventually drop to the 1.4100 round-figure mark.

On the flip side, a sustained strength beyond the 1.4500 mark could allow the USD/CAD pair to test the monthly swing high, around the 1.4540-1.4545 region. Some follow-through buying could lift spot prices to the 1.4600 round figure en route to the 1.4670 region and the 1.4700 mark. The momentum could extend further towards the 1.4800 neighborhood, or the highest level since April 2003 touched last month.

USD/CAD 4-hour chart

• USD/CAD edges lower to 1.4365 in Wednesday’s late American session. 
• US CPI rose at the slowest pace in four months in February. 
• BoC cut its key interest rate by 25 bps on Wednesday, citing trade uncerainty with the US for the decision.

The USD/CAD pair weakens to near 1.4365 during the late American session on Wednesday. The upside for the Greenback might be limited amid intense tariff uncertainty from US President Donald Trump and fears of a US recession.

US inflation rose at the slowest pace in four months in February. Data released by Labor Statistics on Wednesday showed that the US Consumer Price Index (CPI) increased 0.2% MoM in February after a sharp 0.5% advance in January. This figure came in softer than the expectation of 0.3%. The core CPI, excluding volatile food and energy categories, rose 0.2% MoM during the same period. 

This inflation report fueled speculation that the US Federal Reserve (Fe) may cut rates sooner than previously thought. This, in turn, might drag the US Dollar (USD) lower against the Canadian Dollar (CAD) in the near term. 

As widely expected, the Bank of Canada (BoC) on Wednesday decided to cut its key interest rate by 25 basis points (bps), bringing it down to 2.75%. This was the BoC’s seventh consecutive interest rate cut. A move that comes just hours after US President Donald Trump issued new steel and aluminum tariffs against Canada.

BoC governor Tiff Macklem said during the press conference, “In recent months, the pervasive uncertainty created by continuously changing U.S. tariff threats has shaken business and consumer confidence.” Tu Nguyen, economist at RSM Canada, said the uncertainty was hurting Canadian growth and another round of tariffs in April could limit the BoC’s options even more. This might exert some selling pressure on the Loonie and help limit the pair’s losses. 

• USD/CAD looks for an interim support near 1.4400 after the release of the US inflation data for February and the BoC’s monetary policy decision.
• Cooling US inflation is expected to prompt Fed dovish bets.
• The BoC cut interest rates by 25 bps to 2.75%, as expected, and guided a dismal economic outlook.

The USD/CAD pair looks for temporary support near the key level of 1.4400 during North American trading hours on Wednesday after the release of the United States (US) Consumer Price Index (CPI) data for February and the Bank of Canada’s (BoC) interest rate decision.

The US CPI report showed that year-on-year headline and core inflation decelerated at a faster-than-expected pace to 2.8% and 3.1%, respectively. On a monthly basis, both headline and core CPI rose at a moderate pace of 0.2%, compared to estimates of 0.3%. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, moved higher to near 103.75  after the US inflation data release from the four-month low of 103.20 refreshed on Tuesday.

The recovery move in the Greenback appears to be short-lived as cooling inflationary pressures is the unfavorable scenario for the US Dollar (USD), knowing that soft inflation data boosts Federal Reserve (Fed) dovish bets.

Meanwhile, the Canadian Dollar (CAD) gained after the BoC reduced its key borrowing rates by 25 basis points (bps) to 2.75%, as expected. Traders were increasingly confident about the BoC easing its monetary policy further amid growing worries over the Canadian economic outlook due to the tariff war with the US.

On Tuesday, Canada’s Ontario Premier Doug Ford agreed to roll back the 25% surcharge levied on electricity exported to the US after President Donald Trump threatened to impose additional 25% tariffs on imports of aluminum and steel from Canada. Earlier this month, Trump imposed 25% tariffs on Canada for allowing drugs into the US through borders.

After the policy decision, Boc Governor Tiff Macklem warned that heightened “trade tensions” could disrupt “job market recovery”. Macklem warned that US tariffs will likely “increase inflationary pressures in Canada and curb growth”. He guided a moderate growth in the January-March period as trade conflict weighs on “sentiment and activity”.

Today, focus in CAD FX space turns to the BoC meeting at 14:45 CET - where markets and consensus favour a 25bp rate cut, Danske Bank's FX analysts Kristoffer Kjær Lomholt and Filip Andersson report. 

Any easing on tariffs to act as a CAD positive

"We also anticipate a 25bp rate cut, bringing the policy rate to 2.75%, as we expect the BoC to ensure that the Canadian economy is well-padded against the impact of US tariffs. Note that it is an interim meeting without a new MPR, but focus will remain on tariffs, which continues to weigh heavily on USD/CAD." 

"This was evident in yesterday's session, with the cross surpassing the 1.45-mark following Trump's remarks about doubling tariffs on all imported steel and aluminium products from Canada after Ontario announced that it would maintain its electricity levy until US tariffs were removed." 

"However, the pair concluded the session lower around 1.44 amid news that Trump is 'probably' going to reduce the recently increased tariffs on Canada after Ontario suspended its surcharge on electricity exports to the US. We forecast USD/CAD to tick down to 1.41 in the near term, given stretched short CAD positioning and further USD-weakness. Any easing on tariffs would act as a CAD positive, while more hawkish tones from the BoC would also support our short-term view."

USD/CAD broke out from its multiyear range and experienced an extended uptrend, Société Générale's FX analysts note. 

A move towards 1.4240 and 1.4150 can’t be ruled out 

"The move has faced strong resistance near 1.4800 last month. A phase of consolidation is under way after this test. The pair has so far carved out a lower high near 1.4550, the 61.8% retracement of the first leg of pullback." 

"However, signals of a large decline are not yet visible. Low achieved earlier this week at 1.4350 is first support. If this is breached, a deeper down move can’t be ruled out towards 1.4240 and February low of 1.4150."

• USD/CAD may encounter initial resistance at the monthly high of 1.4543.
• The 14-day Relative Strength Index (RSI) is positioned above 50, supporting a bullish outlook.
• Immediate support is positioned at the nine-day EMA, around the 1.4401 level.

USD/CAD retraces its recent losses, trading around 1.4440 during the European hours on Wednesday. Technical analysis on the daily chart suggests the pair remains within an ascending channel pattern, suggesting a bullish bias.

The 14-day Relative Strength Index (RSI) remains above 50, reinforcing a bullish sentiment. A continued decline could further validate the downside bias. Additionally, the USD/CAD pair remains above the nine-day Exponential Moving Average (EMA), signaling a strengthening short-term price momentum.

The USD/CAD pair could find initial resistance at the monthly high of 1.4543, which was recorded on March 4., followed by the upper boundary of the ascending channel at 1.4650. A break above this level could reinforce the bullish bias and support the pair to explore the region around 1.4793—the highest level since March 2003, recorded on February 3.

On the downside, the immediate support is located at the nine-day EMA of 1.4401 level. A break below this level could weaken the short-term price momentum and put downward pressure on the USD/CAD pair to test the 50-day EMA at 1.4322, closely aligned with the ascending channel’s lower boundary.

Further decline would weaken the bullish bias and lead the USD/CAD pair to navigate the area around the three-month low of 1.4151, last seen on February 14.

USD/CAD: Daily Chart

• USD/CAD gains ground as traders adopt caution ahead of the US CPI data.
• The Bank of Canada is widely anticipated to deliver a 25 basis point rate cut on Wednesday.
• The US Dollar faced challenges amid mounting concerns over a potential US economic slowdown.

USD/CAD maintains its gains after a previous session of losses, trading around 1.4440 during Asian hours on Wednesday. The pair's upside is supported by a stronger US Dollar (USD), driven by market caution ahead of the US Consumer Price Index (CPI) release and the Bank of Canada (BoC) interest rate decision later in the North American session.

According to LSEG data, financial markets estimate an 80% probability of a quarter-point rate cut by the Bank of Canada (BoC) in March, which would lower the policy rate from 3.0% to 2.75%. Investors also anticipate at least two additional cuts by the end of 2025.

The USD/CAD pair faced resistance as the Canadian Dollar (CAD) found support from easing trade war concerns. Ontario’s decision to suspend a planned 25% surcharge on electricity exports to the US, along with President Trump’s reconsideration of doubling tariffs on Canadian steel and aluminum, helped reduce cost pressures on Canadian exporters.

Meanwhile, Canada’s Energy Minister, Jonathan Wilkinson, warned on Tuesday that the country could implement non-tariff measures, including potential restrictions on Oil exports to the US, if trade tensions escalate further.

The US Dollar faced challenges amid growing concerns about a potential economic slowdown in the US. President Trump described the economy as being in a "transition period," a statement investors viewed as an early indication of possible turbulence ahead.

• USD/CAD loses momentum to near 1.4430 in Tuesday’s late American session. 
• New tariffs on Canadian steel and aluminum will be 25%, not 50%, the White House said. 
• The BoC is expected to deliver a 25 basis points (bps) interest rate cut at its March meeting on Wednesday.

The USD/CAD pair trades in negative territory around 1.4430 during the late American session on Tuesday. Uncertainty surrounding the US President Donald Trump administration's trade policy and US recession concerns continue to undermine the US Dollar (USD) against the Canadian Dollar (CAD). Traders brace for the US February Consumer Price Index (CPI) inflation report and the Bank of Canada (BoC) interest rate decision on Wednesday. 

Trump reversed his decision to double tariffs on Canadian steel and aluminum to 50%, which he announced late Tuesday. The White House confirmed to Reuters that new 25% tariffs on all imported steel and aluminum will still go into effect on Wednesday, including against allies and major US suppliers Canada and Mexico.

The US Dollar Index (DXY), a measure of the USD's value relative to its most significant trading partners' currencies, declines to new multi-month lows near 103.20 amid the likelihood of a US economic slowdown. The US February CPI inflation report will be in the spotlight on Wednesday. The headline CPI inflation is expected to cool down in February after accelerating in January. If the report shows a softer-than-expected outcome, this could exert some selling pressure on the Greenback against the CAD in the near term. 

On the Loonie front, financial markets put the odds of another quarter-point rate cut this week at around 80%, according to LSEG data. That would bring the policy rate to 2.75% from 3.0%. Investors expect at least two further reductions by the end of 2025. The rising speculation of further BoC rate reductions could undermine the CAD and help limit the pair’s losses. 

• USD/CAD slides to near 1.4400 amid weakness in the US Dollar.
• US President Trump’s tariff agenda has prompted uncertainty over the US economic outlook.
• The BoC is expected to cut its borrowing rates by 25 bps to 2.75% on Wednesday.

The USD/CAD pair declines to near 1.4400 in European trading hours on Tuesday after correcting from the four-day high of 1.4470 posted on Monday. The Loonie pair weakens as the US Dollar (USD) underperforms across the board amid fears that the United States (US) could face economic turbulence in the near term due to President Donald Trump’s ‘America First’ policies.

Donald Trump’s tariff agenda is expected to increase input costs for US business owners, which they will pass on to consumers. Such a scenario would result in a decline in households’ purchasing power, diminishing the overall demand.

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, slumps to near 103.35, the lowest level seen in four months.

Meanwhile, the Canadian Dollar (CAD) has been underperforming for over a month as Trump has imposed 25% tariffs on Canada but has provided a one-month exemption on goods that come under the United States-Mexico-Canada Agreement (USMCA).

On Wednesday, investors will focus on the Bank of Canada’s (BoC) monetary policy decision. Analysts at Citi expect the BoC to cut interest rates by 25 basis points (bps) to 2.75% as Trump tariffs have intensified fears of a recession.

USD/CAD holds above the 100-period Exponential Moving Average (EMA), which is around 1.4200, suggesting that the overall trend is bullish.

The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, suggesting a sideways trend.

Going forward, an upside move above the March 10 high of 1.4470 will open the door toward the psychological resistance of 1.4500 and the January 30 high of 1.4595.

On the contrary, a breakdown below the February 14 low of 1.4151 by the pair would expose it to the December 9 low of 1.4094, followed by the December 6 low of 1.4020.

USD/CAD daily chart

• USD/CAD remains under pressure as the US Dollar weakens amid growth concerns over the US economy.
• President Donald Trump referred to the economy as being in a "transition period," hinting at a potential slowdown.
• The Bank of Canada is widely expected to cut rates by 25 basis points at its March meeting on Wednesday.

USD/CAD holds losses after two days of gains, trading around 1.4440 during the Asian hours on Tuesday. The pair loses ground as the US Dollar (USD) struggles amid concerns that tariff policy uncertainty could push the US economy into recession. Investors are now looking ahead to February’s Consumer Price Index (CPI) release on Wednesday for further insights into inflation trends.

US President Donald Trump characterized the economy as being in a "transition period," hinting at a potential slowdown. Investors took his remarks as an early signal of possible economic turbulence in the near future.

Fed Chair Jerome Powell reassured markets that the central bank sees no immediate need to adjust monetary policy despite rising uncertainties. San Francisco Fed President Mary Daly echoed this sentiment, noting that increasing business uncertainty could dampen demand but does not justify an interest rate change.

US Commerce Secretary Howard Lutnick stated on Sunday that the 25% tariffs, imposed by President Donald Trump in February, on imports from top foreign suppliers like Canada and Mexico, set to take effect on Wednesday, are unlikely to be postponed, according to Bloomberg. While US steelmakers have urged Trump to maintain the tariffs, businesses reliant on these materials may face increased costs.

The Bank of Canada (BoC) is expected to cut rates by 25 basis points at its March meeting on Wednesday. CIBC analysts predict the central bank will lower its benchmark rate to 2.75%, with further cuts likely if trade uncertainty continues.

• USD/CAD trades in negative territory near 1.4435 in Monday’s late American session. 
• The fears of the US economic slowdown and persistent selloff on Wall Street weigh on the US Dollar. 
• The BoC is expected to cut its benchmark rate by 25 bps to 2.75%. 

The USD/CAD pair trades with mild losses around 1.4435, snapping the two-day winning streak during the late American session on Monday. Investors worried that tariff policy uncertainty would tip the US economy into a recession, weighing on the US Dollar (USD). Investors brace for the Bank of Canada (BoC) interest rate decision on Wednesday, which is expected to continue its easing campaign. 

The probable US economic slowdown and ongoing selloff on Wall Street drag the Greenback lower against the Canadian Dollar (CAD). The weaker-than-expected US February job data suggested that the Federal Reserve (Fed) remained on track to cut interest rates multiple times this year. Traders are now pricing in 75 basis points (bps) of cuts from the Fed this year, LSEG data showed, with a rate cut fully priced in for June. 

Investors will closely watch the US Consumer Price Index (CPI) inflation data on Wednesday for fresh impetus. Investors hope for another cooldown in headline CPI inflation, which accelerated in January.

On the other hand, the BoC is anticipated to deliver another quarter-point rate cut at its March meeting on Wednesday while it waits to see how long the dispute with Canada’s largest trading partner lasts. CIBC analysts expect the Canadian central bank to cut 25 bps on Wednesday, lowering its benchmark rate to 2.75%, with more cuts to follow this year if trade uncertainty persists. The rising bets of further BoC rate reductions could undermine the CAD and help limit the pair’s losses. 

Meanwhile, a decline in crude oil prices amid tariff uncertainty and rising output from OPEC+ producers might exert some selling pressure on the commodity-linked Loonie. It’s worth noting that Canada is the largest oil exporter to the United States (US), and lower crude oil prices tend to have a negative impact on the CAD value.

For CAD FX, all eyes will be on Wednesday, with the BoC meeting at 14:45 CET, where markets and consensus favour a 25bp rate cut, Danske Bank's FX analysts Kristoffer Kjær Lomholt and Filip Andersson report. 

USD contunues to weaken

"Likewise, we expect the BoC to continue its easing cycle, cutting the policy rate by 25bp to 2.75% to ensure that the economy is well-prepared for the impact of US tariffs. Hence, tariffs continue to weigh heavily on the Canadian economy and CAD FX. Looking ahead, we project USD/CAD to tick down to 1.41 given stretched short CAD positioning alongside continued broad USD weakening."

• USD/CAD consolidates below 1.4400 as both the US Dollar and the Canadian Dollar are underperforming.
• Trump’s economic policies are expected to dent US economic growth.
• Investors await the US CPI data for February and the BoC’s policy decision, both are releasing on Wednesday.

The USD/CAD pair trades in a tight range around 1.4370 in European trading hours on Monday. The Loonie pair consolidates as weakness in the US Dollar (USD) has been offset by declining Canadian Dollar (CAD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, struggles to hold the key support of 103.50, the lowest level seen in four months.

The Greenback is under severe pressure as market experts believe a slowdown in the United States (US) economy due to “America First” policies by President Donald Trump. Investors expect Trump's policies to be inflationary and pro-growth in the longer term but see severe economic turbulence in the near term.

Knowing that US employers are expected to be borne the impact of Trump’s tariff policies, they would be forced to pass on the impact to end consumers. Such a scenario would result in a sharp decline in the overall demand as higher prices would diminish the purchasing power of consumers. This assumption has led to an increase in market expectations that the Federal Reserve (Fed) will reduce interest rates in the June policy meeting. The probability of the Fed to cut interest rates in June has increased to 82% from 54% a month ago, according to the CME FedWatch tool.

For more cues on the interest rate outlook, investors will focus on the US Consumer Price Index (CPI) data for February, which will be released on Wednesday. On year, headline and core CPI are estimated to have decelerated to 2.9% and 3.2%, respectively.

Meanwhile, the Canadian Dollar is underperforming as Donald Trump has imposed 25% tariffs on Canada. However, a number of products that come under the purview of the purview of United States-Mexico-Canada Agreement (USMCA) have been exempted for a month.

This week, investors will pay close attention to the Bank of Canada’s (BoC) monetary policy decision, which will be announced on Wednesday. The BoC is expected to cut interest rates by 25 basis points (bps) to 2.75%.

• USD/CAD may appreciate due to persistent trade uncertainties following China’s 100% tariff on Canadian imports.
• Canadian Prime Minister Mark Carney may call an early election, possibly by late April or early May 2025.
• The US Dollar struggles amid worries about a potential slowdown in the US economy.

USD/CAD remains steady after registering gains in the previous session, trading around 1.4360 during the Asian hours on Monday. The Canadian Dollar (CAD) may face headwinds due to ongoing trade uncertainties.

On Saturday, China announced that it will impose a 100% tariff on Canadian rapeseed oil, oil cakes, and peas, along with a 25% levy on aquatic products and pork from Canada. This move, in response to tariffs introduced by Canada in October, intensifies trade tensions and adds another dimension to the broader trade conflict largely driven by Trump's tariff policies. The new tariffs are set to take effect on March 20.

Last week, President Trump’s 25% tariffs on Canadian and Mexican imports took effect. However, on Thursday, a one-month exemption was introduced for goods that comply with North American trade pact standards, providing some relief.

Amidst this backdrop, speculation is growing that Canadian Prime Minister Mark Carney could call an election as early as Monday. While Canada’s next federal election is scheduled for October 20, 2025, an early call remains possible, potentially by late April or early May 2025.

US Commerce Secretary Howard Lutnick stated late Sunday that the 25% tariffs on steel and aluminum imports, scheduled to take effect on Wednesday, are unlikely to be delayed. Ordered by US President Donald Trump in February, the tariffs apply to imports from major foreign suppliers, including Canada and Mexico, and cover finished metal products, according to Bloomberg.

The US Dollar (USD) faces downward pressure due to concerns over a potential slowdown in the United States (US) economy. However, the downside of the Greenback could be limited as the US Treasury yields rise.

The US Dollar Index (DXY), which measures the US Dollar against six major currencies, is losing ground for the fifth consecutive day, is trading around 103.80 with 2- and 10-year yields on US Treasury bonds standing at 3.97% and 4.28%, respectively, at the time of writing.

• USD/CAD climbs to near 1.4380 after the release of the US/Canada employment data for February.
• The Canadian Dollar weakens as the economy barely added fresh workers in February.
• US NFP data misses estimates by a slight margin.

The USD/CAD pair gains sharply to near 1.4380 in Friday’s North American session. The Loonie pair attracts significant bids after the release of the labor market data of February of both the United States (US) and Canada.

The Canadian Dollar (CAD) tumbles as Statistics Canada reported that the laborforce barely grew last month. The Canadian economy added 1.1K fresh workers, while economists expected employers to have added 20K job-seekers lower than 76K in January. The Unemployment Rate remains steady at 6.6% against estimates of 6.7%. Average Hourly Wages, a key measure of wage growth, accelerated at a robust pace to 4% from the prior release of 3.7%.

Soft labor market data is expected to boost market expectations that the Bank of Canada (BoC) will cut interest rates again in its monetary policy meeting on Wednesday.

The Canadian Dollar has been underperforming lately as US President Donald Trump has imposed 25% tariffs on Canada and Mexico. He has relaxed tariffs on goods compliant with the United States-Mexico-Canada Agreement (USMCA) till April 2.

During North American trading hours on Friday, Trump ordered a reduction of the duty rate for non-USMCA-compliant potash to 10% from 25% - Federal Register Notice.

In the US region, Nonfarm Payrolls (NFP) came in lower at 151K than estimates of 160K but remained higher than 125K seen in January. The jobless rate accelerated to 4.1% from estimates and the former release of 4%. A slightly lower US NFP than expectations would weigh on market expectations that the Federal Reserve (Fed) will keep interest rates steady for longer.

Canada’s February labor force report will help shape rate expectations ahead of next week’s Bank of Canada (BOC) policy setting meeting, BBH FX analysts report. 

Liberal Party to choose a successor to Prime Minister Justin Trudeau

"Consensus sees a 20k rise in jobs vs. 76k in January, while the unemployment rate is expected at 6.7% vs. 6.6% in January. Overall, the labor market remains soft and firms’ hiring intentions are muted." 

"Markets price-in 80% odds of a 25bps BOC policy rate cut at the March 12 meeting given the drag to growth from tariffs uncertainty. Still, we expect the BoC to pause easing next week because core inflation (average of trim and median CPI) is tracking above the BOC’s Q1 projection of 2.5%."

"On Sunday, Liberal Party members will choose a successor to Prime Minister Justin Trudeau. The new leader is expected to face a vote of no confidence once parliament reopens on March 24 which will trigger snap federal elections."

• USD/CAD wobbles around 1.4300 ahead of the US/Canada labor market data for February.
• US President Trump has announced tariff relaxation on a number of imports from Canada and Mexico.
• The US Dollar Index posts a fresh four-month low near 103.60.

The USD/CAD pair trades in a tight range around 1.4300 in European trading hours on Friday. The Loonie pair struggles for direction as investors await the employment data for February from both the United States (US) and Canada.

The US NFP report is expected to show that the economy added 160K fresh workers, higher than 143K recorded in January. The Unemployment Rate is seen steady at 4%.

In the Canadian region, economists see a fresh addition of 20K workers, fewer than 76K in January. The jobless rate is expected to have accelerated to 6.7% from 6.6% in January.

Meanwhile, the Canadian Dollar (CAD) failed to discover an interim relief despite US President Donald Trump's confirmed tariff exemption on a significant number of products compliant with the United States-Mexico-Canada agreement (USMCA). The CAD is almost sideways against the US Dollar (USD) despite the latter has extended its downside. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, tumbles to near 103.60, the lowest level seen in four months.

USD/CAD trades inside Thursday’s trading range around 1.4300 on Friday. The Loonie pair holds above the 100-period Exponential Moving Average (EMA), which is around 1.4200, suggesting that the overall trend is bullish.

The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, suggesting a sideways trend.

Going forward, an upside move above the February 9 high of 1.4380 will open the door toward the round-level hurdle of 1.4400 and the psychological resistance of 1.4500.

On the contrary, a breakdown below the February 14 low of 1.4151 by the pair would expose it to the December 9 low of 1.4094, followed by the December 6 low of 1.4020.

USD/CAD daily chart