Canadian dollar gains 0.2% against the greenback
Trades in a range of 1.4407 to 1.4520
Two-year yield hits nearly three-year low
TORONTO, March 4 – The Canadian dollar clawed back some of its recent declines against its U.S. counterpart on Tuesday as the greenback posted broad-based losses and investors doubted that hefty U.S. tariffs on Canadian goods would be sustained.
The loonie was trading 0.2% higher at 1.4450 per U.S. dollar, or 69.20 U.S. cents, after trading in a range of 1.4407 to 1.4520. On Monday, the currency posted its seventh straight day of declines and hit a one-month intraday low of 1.4541. U.S. President Donald Trump’s new 25% tariffs on imports from Mexico and Canada took effect, along with a doubling of duties on Chinese goods to 20%, launching new trade conflicts with the top three U.S. trading partners.
Canadian Prime Minister Justin Trudeau said Ottawa would respond with 25% tariffs on C$30 billion ($20.7 billion) worth of U.S. imports, and another C$125 billion if Trump’s tariffs were still in place in 21 days.
“The CAD has certainly priced in some tariff risk in recent weeks but not 25%, so price action is a little surprising,” Shaun Osborne, chief currency strategist at Scotiabank, said in a note. “Price action suggests perhaps that markets are skeptical that 25% tariffs will remain in place for too long.” The U.S. dollar fell to a three-month low against a basket of major currencies on concerns about slowing growth and the impact from tariffs on the U.S. economy, while the price of oil, one of Canada’s major exports, was trading 0.8% lower at $67.80 a barrel following reports that OPEC will proceed with a planned output increase in April.
Canadian bond yields were mixed across a steeper curve as investors priced in a roughly 80% chance that the Bank of Canada would cut interest rates further on March 12. The 2-year was down 2 basis points at 2.457%, its lowest level since April 2022. (Reporting by Fergal Smith; Editing by Paul Simao)
