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The USD/CAD pair posts modest losses near 1.4315 during the late American session on Wednesday. The Canadian Dollar (CAD) edges higher as Canada’s trade balance shifted into surplus and US President Donald Trump delayed his orders to impose 25% tariffs on Canada for 30 days.
Canada in December reported its first trade surplus in ten months, with exports outpacing imports due to US businesses building up inventory ahead of potential tariffs, supporting the Loonie. Additionally, US tariffs provided relief from the looming trade war threat. Trump on Monday agreed to a 30-day pause on his tariff threats against Mexico and Canada as trading partners took steps to appease his concerns about border security and drug trafficking.
“Tariff worries are easing – for now, at least – which is allowing the CAD to stabilize,” said Shaun Osborne, chief currency strategist at Scotiabank. “Unless trade talks deteriorate significantly again, there is a chance that the USD-CAD peak reached Monday near 1.48 will represent a significant high-water mark for spot,” added Osborne.
Data released by the Institute for Supply Management (ISM) on Wednesday showed that the US Services Purchasing Managers’ Index (PMI) declined to 52.8 in January from 54.0 (revised from 54.1) in December. This reading came in weaker than the estimation of 54.3.
The US Dollar (USD) weakens in an immediate reaction to the downbeat US economic data. The US labor market data on Friday will be in the spotlight. In case of the stronger-than-expected outcome, this could boost the Greenback against the CAD in the near term. More By This Author:WTI Holds Above $72.50 Amid Tariff Concerns EUR/GBP Recovers Some Lost Ground Above 0.8350, Eyes On ECB Rate Decision WTI Drifts Lower To Near $72.50 As US Stockpile Rises
