The Canadian dollar CADUSD strengthened against its U.S. counterpart on Tuesday as oil prices rose and investors grew skeptical that the U.S. will follow through with some proposed tariffs on trading partners.
The loonie was trading 0.2% higher at 1.4285 to the U.S. dollar, or 70.00 U.S. cents, after moving in a range of 1.4280 to 1.4345.
U.S. President Donald Trump signed proclamations late on Monday imposing tariffs on steel and aluminum imports, much of which come from Canada, but the measures do not go into effect until March 12.
“Trump’s tariffs increasingly look like negotiating tools rather than economic tools,” said Adam Button, chief currency analyst at ForexLive. “The market is not convinced that any tariffs are coming. That’s the trade right now.”
Last Tuesday, Trump suspended his threat of steep tariffs on Mexico and Canada, agreeing to a 30-day pause in return for concessions on border and crime enforcement with the two neighbouring countries.
The price of oil, one of Canada’s major exports, rose for a third straight day as sanctions raised concerns about Russian and Iranian oil supplies.
U.S. crude oil futures settled 1.4% higher at $73.32 a barrel, while the U.S. dollar fell against a basket of major currencies. U.S. Federal Reserve Chair Jerome Powell deferred on questions about tariffs in an appearance before Congress.
The value of Canadian building permits grew by 11.0% in December from November, helped by a jump in multi-unit construction intentions, and was up 34.9% year-over-year.
Canadian government bond yields moved higher across the curve. The 10-year was up 3.8 basis points at 3.102%, trading at its highest level since February 4.