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The Canadian Dollar is facing renewed selling pressure following the collapse of trade negotiations between the United States and Canada. According to Michael Pfister, an analyst at Commerzbank, Ottawa's intention to implement retaliatory tariffs signals that a prolonged trade dispute between the two nations is increasingly likely. The prospect of an extended trade friction poses a direct threat to Canada's export-reliant economy. Analysts note that retaliatory measures could compress corporate margins and weaken economic growth expectations, prompting foreign exchange traders to price in a more dovish outlook for the Bank of Canada. Moving forward, market participants will focus on official policy announcements from both Washington and Ottawa to gauge the severity of potential tariffs. The USD/CAD currency pair is expected to remain highly sensitive to headline risks and further developments in cross-border commercial relations.
