USD/CAD strengthens towards 1.4400 amid rising risk aversion

USD/CAD edged higher to trade near 1.4390 during the evening U.S. session on Monday. The Canadian dollar (CAD) weakened against the U.S. dollar (USD) as traders turned risk-averse ahead of the upcoming announcement of U.S. trade tariffs on Wednesday. The U.S. ISM Manufacturing Purchasing Managers' Index (PMI) for March will be closely watched on Tuesday.

U.S. President Donald Trump said his plan for reciprocal tariffs would apply to all other countries when it is announced on Wednesday, adding uncertainty to a much-anticipated trade policy just days before implementation. Trump denied that the additional tariffs would target only the first 10 or 15 trading partners that impose import duties on U.S. goods.

The Canadian dollar has been under selling pressure since Trump signed a proclamation last week imposing a 25% tariff on auto imports and promising tougher penalties against the European Union and Canada if they unite against the United States. About 75% of Canada's exports go to the United States, including oil and cars.

On the other hand, rising crude oil prices could boost the commodity-linked Canadian dollar in the near term and create resistance for USD/CAD. It is worth noting that Canada is the largest exporter of oil to the United States, and higher crude oil prices tend to have a positive impact on the value of the Canadian dollar.