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USD/CAD approaches 1.4330 as the US Dollar decreases prior to President Trump’s tariff announcement, which is expected to negatively impact Canada’s economic prospects. The US added 155,000 jobs in March, surpassing the estimated 105,000.
In the North American session, the USD/CAD pair rises amidst pressures on the US Dollar. The US Dollar Index falls to around 104.00, with Trump’s new tariffs likely adding strain on the Canadian economy, as previous levies have already been implemented.
Canadian Employment Expectations
Canada’s domestic labour market data is anticipated on Friday, predicting an increase of 12,000 jobs in March, up from February’s 1,100. Expectations regarding Trump’s tariffs also suggest a potential adverse effect on the US economy, likely impacting overall household purchasing power.
Despite positive employment data, the US Dollar continues to decline as the implications of the tariffs loom. The updated ADP Employment Change reflects a substantial rise, indicating strong private sector job growth compared to previous estimates.
As the USD/CAD trades just beneath the 1.4330 mark, we’re noticing a clear shift driven by macroeconomic divergence and political uncertainty. Although the U.S. reported a higher-than-expected job increase in March—155,000 versus the prior 105,000 forecast—the greenback has given back ground. This seems less a rejection of the data and more a reflection of concerns building around the incoming trade measures.
Trump’s anticipated tariffs—likely to include materials and possibly manufactured goods—are weighing on sentiment, especially towards Canada, which remains deeply integrated into American supply chains. Previously enacted levies have already begun reshaping certain trade flows, and the upcoming announcement risks adding fresh complications. The currency market has taken notice.
Tariff Impact On Currency Dynamics
On the Canadian side, the March employment figures are scheduled for release this Friday. Market consensus is leaning towards a relatively modest improvement in the labour market—12,000 jobs after February’s softer 1,100 figure. While this wouldn’t normally spark major movements in forex markets, the context now suggests a more sensitive response. If the number misses, it could reinforce concerns about domestic weakness in Canada at the exact moment external trade pressure increases. If it beats, however, it may dull the immediate selling pressure on the loonie.
From our viewpoint on the data, the soft drop in the U.S. Dollar Index to around 104.00 shows capital shuffling into safer or less exposed instruments. Not because the U.S. suddenly looks frail, but because tariffs often carry unpredictable economic feedback—making direct FX exposure harder to manage in the near term. Wage growth, real purchasing power, and retail response from U.S. households remain areas we are keeping a close watch on, as these gauges will reveal the actual impact of these policy moves over the medium term.
The noticeable jump in the ADP private payrolls signals ongoing resilience within the U.S. private sector despite looming policy risks. Yet pricing in the FX markets suggests traders aren’t fully convinced this strength will persist under the new import costs standards. Especially if retaliatory moves appear—either from North American partners or other trading blocs. The reduction in confidence now seems baked into the price movement more so than the economic figures alone might justify.
What’s clear to us is that volatility could remain pronounced in the USD/CAD pair in the days ahead, particularly around data releases or policy commentary. Traders hedging positions should account for these looming tariffs no matter how robust the current domestic figures appear. The exchange rate is increasingly reflecting expectations that go well beyond headline jobs data, pulling in broader sentiment about cross-border trade, long-cycle manufacturing forecasts, and even shifts in consumer resilience.
We are watching interest rate differentials too, but those now take a backseat to trade dynamics, at least short term. For now, we anticipate reactionary flows to again drive movement, not a broader directional change in monetary policy, given the current conditions.
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