The Canadian dollar (CAD) strengthened against its US Dollar (USD) on Wednesday as investors weighed signs of an exodus from American financial assets amid a widening global trade war and despite further losses for oil, one of Canada’s major exports.
The Canadian Dollar was trading 0.7% higher at 1.4160 per U.S. dollar, or 70.62 U.S. cents, after touching its strongest intraday level since Friday at 1.4133.
“For a variety of reasons, investors are bailing out of American financial markets,” Karl Schamotta, chief market strategist at Corpay, said in a note.
“The U.S. could soon find itself running smaller trade and financial imbalances, but at the cost of much lower growth rates.”
The U.S. dollar tumbled against a basket of major currencies as China said it will impose 84% tariffs on U.S. goods from Thursday, up from the 34% previously announced.
U.S. “reciprocal” tariffs on dozens of countries took effect earlier on Wednesday, including massive 104% duties on Chinese goods.
Yields on U.S. Treasuries, normally a safe-haven asset, jumped while Wall Street edged higher after heavy losses in recent days.
“The CAD is taking the heightened market volatility and increased uncertainty in its stride, at least for now,” Shaun Osborne, chief currency strategist at Scotiabank, said in a note.
The price of oil hit a fresh four-year low, down 4.4% at $56.93 a barrel, as tariff increases stoked fears of a global recession.
Japan and Canada, which is this year’s chair of the G7 developed economies, have agreed to cooperate to maintain stability in financial markets and the global financial system, Japan’s Ministry of Finance said.
Canadian bond yields rose across the curve, but the moves were less than for U.S. bonds.
The 10-year was up 1.8 basis points at 3.155%, after earlier touching its highest level since February 20 at 3.228%.
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