Canadian Dollar Weakens Amid US Tariff Deadline Tensions

The Canadian dollar weakened against its US counterpart on Tuesday as investors weighed the prospects of Canada reaching a deal with Washington to avoid new tariffs. The loonie was trading 0.2% lower at 1.39 per US dollar, or 71.94 US cents, after touching its highest level in more than two months on Monday.

Prime Minister Mark Carney spoke with US President Donald Trump on Monday as Canada tries to hash out a last-minute deal to avert new 50% tariffs from taking effect at midnight on Wednesday. The new US tariffs would cover about $20 billion worth of imports from Canada.

A durable deal could see the USD-CAD exchange rate extend towards 1.37, according to strategists at Monex Europe. Escalation risks a move back above 1.40 over coming days.