The Canadian dollar rallied Wednesday morning after U.S. Commerce Secretary Howard Lutnick hinted that tariff relief could be coming for Canada one day after sweeping 25 per cent tariffs were imposed by U.S. President Donald Trump.
But Lutnick was short on details, so uncertainty remains for loonie watchers like Shaun Osborne, managing director and chief FX strategist at Scotiabank.
“It’s quite confusing,” Osborne told BNN Bloomberg in a Wednesday interview, about an hour after Lutnick told Bloomberg television that some sectors could see an exemption from tariffs, and that Trump is expected to make another tariff announcement later in the day.
“The messaging late yesterday was that there might be some sort of concession from Trump today, so we got a little bit of a pop in the Canadian dollar late yesterday afternoon. We’ve held those ranges overnight and this morning.”
Osborne said that Lutnick’s comments, though they’ve been supportive for the loonie since they were made, have simply added to the confusion.
“It’s not really clear what kind of concessions he’s talking about or if we’re going to get any concessions at all,” he said.
The loonie was trading for 69.61 U.S. cents in early trading Wednesday, compared to 69.02 U.S. cents on Tuesday.
Osborne said that going forward, at least in the short term until there is more clarity from Lutnick and Trump on potential tariff concessions, the loonie is likely to trade within the 69-cent range.
“So, it’ll probably be 50 ticks either side of that in the short run,” he said.
“If we get no tariff concessions and we’re still looking at 25 per cent tariffs for a significant period of time, that probably means further weakening in the Canadian dollar, at least back to the lows we saw in early February; probably around the 67-cent point or a little bit below.”
