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USD/CAD remained subdued for the fourth consecutive day during Thursday’s Asian trading session, hovering around 1.4260. The pair came under pressure as the US dollar (USD) weakened and Treasury yields fell.
The U.S. Dollar Index (DXY), which tracks the performance of the greenback against six major currencies, is currently retreating from recent gains and trading near 104.30. Meanwhile, the 2-year Treasury yield was 4.0% and the 10-year Treasury yield was 4.35%.
Investors were closely watching key U.S. economic data due later in the day, including weekly jobless claims and the final report on annualized fourth-quarter gross domestic product (GDP). Additionally, Friday’s release of the personal consumption expenditures (PCE) report – the Fed’s preferred inflation measure – will provide further policy insights.
However, the downside for USD/CAD may be limited as the Canadian dollar (CAD) may face headwinds from new US trade measures. On Wednesday, U.S. President Donald Trump signed an order imposing a 25% tariff on auto imports, effective April 2, with collection starting the next day. Imports of auto parts will enjoy a one-month grace period.
However, parts from Canada and Mexico that fall under the U.S.-Mexico-Canada Agreement (USMCA) will be exempt until U.S. Customs and Border Protection builds a system to enforce tariffs on non-U.S. parts, the White House fact sheet said.
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