Usd/cad Falls Through 1.43 But Domestic Concerns Beginning To Mount

If you look at the last three big spikes on the USD/CAD chart, they tell a story. The climbs to 1.48, 1.4550 and 1.4500 came on tariffs, tariffs and more tariffs. They represent the height of tariff fears around USMCA.

The subtext is what I think is important though as the highs have been progressively lower. The market doesn't think the tariffs will last and that's something I argued Thursday on BNN.

After that, we heard some positive-sounding comments from Canadian officials. That was followed by some better-sounding comments from Trump about fentanyl on the weekend. Then, this morning White House Economic Advisor Kevin Hassett said:

We've been in a negotiation with flexibility with Mexico and Canada. We've got the border under control and we're making a huge amount of progress on fentanyl. Those have both been very positive developments that were related to the tariff policy.

The market is listening, though it's hard to get overly excited with Trump unrelenting in his tariff and '51st state' talk. I think Congress is giving him a bit of latitude for now on the understanding that North American tariffs will come down to much lower rates soon.

If so that should be a tailwind for CAD but at the same time, domestic headwinds are blowing. The BOC survey last week on business employment and capex was dire.

Today, data from the Canadian Real Estate Association showed home sales volumes down 9.8% m/m in February. Prices are holding up for now but they will crack if sales don't come back in a big way in April/May.