Canadian Dollar regains lost ground after BoC rate cut as tariff fears dull to a simmer

• The Canadian Dollar slipped 0.5% higher on Wednesday.
• The Bank of Canada delivered a broadly-expected 25 bps rate cut.
• Trade war concerns continue to boil away on the back burner.

The Canadian Dollar (CAD) recovered some ground on Wednesday, bolstered by a general easing in Greenback market flows. The Loonie gained roughly one-half of one percent against the US Dollar, pushing USD/CAD back down below the 1.4400 handle.

The Bank of Canada (BoC) delivered another quarter-point rate cut despite the overarching threat of a trade war with the US spiraling out of control, as the Canadian central bank races to prop up the off-kilter Canadian economy ahead of a prolonged spat over tariffs with US President Donald Trump. US Consumer Price Index (CPI) inflation figures cooled faster than expected in February, helping to ease overall market tensions somewhat, but investors remain tepid after the US imposed a global 25% tariff on all steel and aluminum imported into the US.

Daily digest market movers: Markets recover balance, but trade war fears continue to simmer

• The Canadian Dollar clawed back around one-half of one percent on Wednesday, dragging USD/CAD back down to the 1.4350 range, a familiar congestion level for Loonie traders.
• US CPI inflation eased slightly in February, helping to batten down a resurgence in inflation concerns sparked by an unexpected uptick in price pressures in January.
• The BoC trimmed its main reference rate by 25 bps, to 2.75%. Further rate cuts will become increasingly more difficult to deliver as the US’s trade war with all of its closest trading partners continues to ramp up.
• US President Donald Trump reminded markets that he still intends to do another batch of tariffs in April. Another ‘defensive’ tariff is also expected in the near future on copper.
• Incoming Canadian Prime Minister Mark Carney, who is slated to replace incumbent PM Justin Trudeau, noted that he’s ready to talk with the US administration, but on his terms.

Canadian Dollar price forecast

The Canadian Dollar’s mid-week rebound puts the USD/CAD chart back into dread territory as the lack of a prevailing trend leaves the Loonie pairing exposed to continued whipsaw conditions. A demand zone 1.4440 and 1.4480 has priced in a firm technical ceiling, while technical support from the sub-1.4300 region has put a firm floor just beneath price action.

USD/CAD daily chart