CAD: Exploring Tariff Implications

Looking beyond the intraday knee-jerk moves.

Last week, USD/CAD traded to the highest level since 2003 as it almost broke the 1.4800 barrier following tariff concerns. President Trump has gone after Canada (and Mexico) as the first targets with his itchy tariff trigger finger, which has caught some slightly blindsided given earlier rhetoric regarding China.

Over the past few trading sessions, USD/CAD has managed to reverse these losses and currently finds itself almost unchanged year-to-date, but that appears to be a small victory in the face of what could be a tricky year ahead.

Today we discuss the implications for the currency based on different trade scenarios and how this might play out. Further, with implied vol spiking but still at relatively low historical levels, we look at how to best position in the options space for moves.