SocGen Says It's Past Peak Pessimism for Canadian Dollar

USDCAD decreased to a 4-week low of 1.42.

Over the past 4 weeks, US Dollar Canadian Dollar lost 1.36%, and in the last 12 months, it increased 4.98%.

The Canadian dollar strengthened past 1.43 per USD in March, reaching a one-month high as investors welcomed reports that not all trade levies scheduled for April 2nd will take effect, with some countries likely to receive exemptions.

Indications that President Trump may implement a three-tiered tariff system with selective exemptions suggest that Canada could face the lowest tier of upcoming tariffs, sparing its exports and easing external pressures on the Loonie.

This optimism is further bolstered by favorable oil price dynamics—robust crude prices amid supply concerns enhance the currency's appeal, given Canada’s status as a major oil exporter.

Additionally, doubts over further aggressive rate cuts by the Bank of Canada, following a hotter-than-expected CPI report for February, have made Canadian assets more attractive.

The US dollar rose against its major trading partners early Wednesday, except for a decline versus the Canadian dollar, ahead of durable goods orders data for February at 8:30 am ET.

An appearance by Minneapolis Federal Reserve President Neel Kashkari is scheduled for 10:00 am ET, followed by weekly energy stocks inventory data at 10:30 am and the Atlanta Fed's gross domestic product growth Nowcast estimate for Q1 around midday.

Earlier Wednesday, the Mortgage Bankers Association said mortgage applications declined in the week ended March 21, while mortgage rates were little changed in the week.

A quick summary of foreign exchange activity heading into Wednesday:

fell to 1.0791 from 1.0795 at the Tuesday US close and 1.0821 at the same time Tuesday morning. There are no Eurozone data on Wednesday's schedule. The next European Central Bank meeting is scheduled for April 16-17.

fell to 1.2907 from 1.2946 at the Tuesday US close and 1.2951 at the same time Tuesday morning. UK consumer prices rebounded less than expected in February after a January decline, while the year-over-year rates for both overall and core CPI slowed, according to data released earlier Wednesday. UK Chancellor Rachel Reeves' budget estimate is expected to be released around 8:30 am ET. The next Bank of England meeting is scheduled for May 8.

rose to 150.1750 from 149.8934 at the Tuesday US close but was below a level of 150.2009 at the same time Tuesday morning. The Japanese leading index rose more than expected in January, though at a slower pace than in the previous month, according to data released overnight. The next Bank of Japan meeting is scheduled for April 30-May 1.

fell to 1.4250 from 1.4281 at the Tuesday US close and 1.4285 at the same time Tuesday morning. Canadian wholesale sales data for February are due to be released at 8:30 am ET. The next Bank of Canada meeting is scheduled for April 16.

The US dollar fell against its major trading partners early Tuesday ahead of a busy schedule of economic data releases and Federal Reserve appearances.

The day starts with the Philadelphia Fed's monthly services reading for March at 8:30 am ET, followed by an appearance by Fed Governor Adriana Kugler at 8:40 am ET.

Weekly Redbook same-store sales are due at 8:55 am ET, followed by home price data for January at 9:00 am ET and an appearance by New York Fed President John Williams at 9:05 am ET.

New home sales data for February, the Richmond Fed's conditions readings for March and consumer confidence data for March are all due to be released at 10:00 am ET.

A second appearance by New York Fed President John Williams is scheduled for 2:35 pm ET.

A quick summary of foreign exchange activity heading into Tuesday:

rose to 1.0817 from 1.0802 at the Monday US close but was below a level of 1.0847 at the same time Monday morning. There are no Eurozone data on Tuesday's schedule. The next European Central Bank meeting is scheduled for April 16-17.

rose to 1.2946 from 1.2922 at the Monday US close but was below a level of 1.2962 at the same time Monday morning. UK car registrations declined sharply in February while UK retail sector conditions deteriorated further in March, according to data released earlier Tuesday. The next Bank of England meeting is scheduled for May 8.

fell to 150.1351 from 150.6491 at the Monday US close but was above a level of 149.6688 at the same time Monday morning. Japanese department store sales declined in February according to data released overnight. The next Bank of Japan meeting is scheduled for April 30-May 1.

fell to 1.4285 from 1.4316 at the Monday US close and 1.4317 at the same time Monday morning. Canadian manufacturing sales for February are due to be released at 8:30 am ET. The next Bank of Canada meeting is scheduled for April 16.

The US dollar fell against its major trading partners early Monday, except for a gain versus the yen, to start another busy week that features the final estimate of Q4 gross domestic product growth and personal income and spending data for February.

Monday's schedule is light, with only the Chicago Federal Reserve's National Activity index for February at 8:30 am ET, followed by the S&P Global flash estimates for manufacturing and services purchasing managers' index for March at 9:45 am ET. Atlanta Fed President Raphael Bostic is due to speak at 1:45 pm ET, followed by Fed Governor Michael Barr at 3:10 pm ET.

Tuesday's highlights include home price data, new home sales, and consumer confidence.

Durable goods orders data and weekly mortgage applications and energy stocks inventory data are due Wednesday.

Thursday's highlights include weekly jobless claims, GDP, advance trade and pending home sales.

Personal income, spending and price data are due to be released on Friday, along with the final University of Michigan consumer sentiment index report for March.

A quick summary of foreign exchange activity heading into Monday:

rose to 1.0848 from 1.0816 at the Friday US close and 1.0842 at the same time Friday morning. Eurozone preliminary manufacturing PMI rose in March but remained below the breakeven point while services PMI declined slightly but still indicates expansion, according to data released earlier Monday. The next European Central Bank meeting is scheduled for April 16-17.

rose to 1.2960 from 1.2920 at the Friday US close and 1.2942 at the same time Friday morning. UK manufacturing PMI declined in March to indicate faster contraction while services PMI improved to indicate faster expansion, according to data released earlier Monday. Bank of England Governor Andrew Bailey is due to speak at 2:00 pm ET. The next Bank of England meeting is scheduled for May 8.

rose to 149.6601 from 149.3192 at the Friday US close and 148.9992 at the same time Friday morning. Japanese manufacturing and services PMI declined in March, indicating contraction for both sectors. The next Bank of Japan meeting is scheduled for April 30-May 1.

fell to 1.4319 from 1.4344 at the Friday US close and 1.4336 the same time Friday morning. There are no Canadian data on Monday's schedule. The next Bank of Canada meeting is scheduled for April 16.

CIBC said Friday that for its forecasts are largely tied to highly uncertain tariff outcomes. CIBC's expectation is that tariffs are reapplied in April and this will have the Bank of Canada easing faster than priced and getting back briefly to the 1.46 level. Moving beyond Q2, CIBC said the outlook for will depend on ongoing trade negotiations with the US. But the bank said its base case is that 25% tariffs get rolled back, and the rate spreads increasingly favour CAD. As a result CIBC sees a selloff in towards 1.42 by Q4 2025.