Trade War Clouds Canadian Dollar's Q2 Rebound

The Canadian dollar is facing a potential hurdle as it prepares for its second-quarter GDP rebound. According to Brown Brothers Harriman's (BBH) Elias Haddad, USD/CAD is trading just above its 200-day moving average near 1.3840. A strong recovery in Q2 is expected, with real GDP seen rising 3.4% SAAR compared to a slight contraction in Q1.

However, the looming US-Canada trade war threatens to cut this rebound short. Haddad warns that current Bank of Canada hike pricing is too aggressive, suggesting that USD/CAD may firm up near 1.4000 if the market reprices with a dovish tone.