Canadian dollar hits one-month low as tariff deadline confirmed

(Updates for market activity and analyst quote in paragraph 3)

Canadian dollar weakens 0.5% against the greenback

Touches a one-month low at 1.4541

Price of oil settles nearly 2% lower

2-year yield falls 8 basis points

TORONTO, March 3 (Reuters) – The Canadian dollar weakened to a one-month low against its U.S. counterpart on Monday as U.S. President Donald Trump said that tariffs on Canada and Mexico will go into effect on Tuesday, denting hopes of another reprieve.

The loonie was trading 0.5% lower at 1.4535 per U.S. dollar, or 68.80 U.S. cents, after touching its weakest intraday level since February 3 at 1.4541.

“As recently as an hour ago, markets had assumed that tariffs would not be imposed, or that they would be dramatically watered down,” Karl Schamotta, chief market strategist at Corpay, said in a note. Trump said that there was no chance for Mexico or Canada to prevent 25% tariffs from taking effect on Tuesday, sending financial markets reeling on the prospect of new economic barriers in North America.

Implementation of the tariffs had previously been pushed back by a month. Canada sends about 75% of its exports to the United States, including oil.

U.S. crude oil futures settled nearly 2% lower at $68.37 a barrel on reports OPEC will proceed with a planned oil output increase in April and on worries that a trade war could hurt the global economy. The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) fell to 47.8 from 51.6 in January, its first move below the 50.0 no-change mark since August, as an uncertain trade outlook led to firms turning the most pessimistic since the start of the COVID-19 pandemic.

Canadian bond yields fell across the curve as investors raised bets on a Bank of Canada interest rate cut this month.

The 2-year was down 8 basis points at 2.493%, its lowest level since February 3. (Reporting by Fergal Smith in Toronto; Editing by Nia Williams)