The Canadian dollar CADUSD rebounded from a near three-week low against its U.S. counterpart on Tuesday as investors weighed downbeat U.S. economic data and potential efforts by U.S. lawmakers to block tariffs on Canadian goods.
The loonie was trading 0.4 per cent higher at 1.4325 per U.S. dollar, or 69.81 U.S. cents, after earlier touching its weakest intraday level since March 14 at 1.4415.
U.S. President Donald Trump is expected to announce on Wednesday a sweeping agenda of reciprocal tariffs. Previously, Trump has threatened, but delayed, 25 per cent duties on most imports from Canada as part of a demand the nation helps staunch the flow of fentanyl into the United States.
Trump on Tuesday urged his fellow Republicans in the U.S. Senate to vote against a measure rebuking his tariff policy that is tied to the fentanyl emergency the president declared involving Canada.
A story in the Globe and Mail saying that some Republican senators are expected to vote for the measure attracted the market’s attention and helped lift the Canadian dollar, said Shaun Osborne, chief currency strategist at Scotiabank.
“It is one of the better performers on the day now in the G10 space,” Osborne added.
U.S. manufacturing contracted in March after growing for two straight months, while a measure of inflation at the factory gate jumped to the highest level in nearly three years amid rising anxiety over tariffs on imported goods.
Canadian manufacturing data was also downbeat. It showed activity contracting at a steeper rate in March as a widening global trade war triggered the sharpest decline in new orders since shortly after the start of the COVID-19 crisis.
Canadian bond yields eased across the curve. The 10-year was down 2.4 basis points at 2.945 per cent, after earlier touching its lowest since March 5 at 2.901 per cent.