USD/CAD Steady at 1.3725 Amid Tariff Concerns and BoC Outlook Focus

USD/CAD Steady Around 1.3725 as Tariff Uncertainty Clouds Market Outlook

Loonie Struggles Amid Trade Policy Concerns

The USD/CAD pair is holding steady around 1.3725 during early Asian trading on Monday. Investors remain cautious due to rising trade uncertainty, especially over the possibility of fresh US tariffs targeting Canadian imports. The sentiment has limited gains for the Canadian Dollar (CAD).

Tariff Confusion Keeps Traders on Edge

US President Donald Trump has threatened a 35% tariff on Canadian imports, igniting fears of renewed trade friction. However, US Commerce Secretary Howard Lutnick played down the severity, calling the proposal "silly" and affirming that most Canadian goods still benefit from tariff-free status under existing trade agreements.

Despite this, the uncertainty surrounding US trade policy—particularly in the context of ongoing US-China tensions—has added pressure on the CAD and increased investor preference for safe-haven USD assets.

BoC Business Outlook Survey in Focus

Markets now turn their attention to the Bank of Canada’s (BoC) Business Outlook Survey, due later today. This will offer fresh insights into the economic sentiment and potential future monetary policy direction in Canada.

A strong reading could provide a lift to the CAD, while a cautious or pessimistic outlook may extend the pair’s rangebound movement near the 1.3700 level.

Dovish Fed Comments Curb USD Strength

Meanwhile, the US Dollar (USD) is seeing limited upside due to dovish commentary from Fed Governor Christopher Waller, who recommended a rate cut at the July meeting, citing broader economic risks and uneven labor market strength.

According to Reuters, markets now expect the Fed to begin easing in September, with two potential rate cuts penciled in for the remainder of the year.