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Goldman Sachs has lowered its USD/CAD forecasts, citing resilient Canadian data, a supportive fiscal policy stance, and reduced expectations for BoC easing. While Canada’s exposure to the US limits CAD’s outperformance on the crosses, Goldman expects CAD to outperform USD over the rest of 2025.

Key Points:

• First Signs of Trade War Impact Emerging:

  • Canada’s latest payrolls report may mark the first evidence of the US-led trade war weighing on hard data outside the US.

• BoC Defers to Fiscal Policy:

  • The Bank of Canada has emphasized fiscal policy as the primary tool to cushion against trade-related growth risks, limiting the need for aggressive monetary easing.

• Stronger CAD on Net:

  • Less dovish BoC expectations and proactive government stimulus support a stronger Canadian dollar, especially versus the USD.

• USD/CAD Forecasts Revised Lower:

  • New projections:

    • 1.36 in 3 months (prior: 1.40)

    • 1.35 in 6 months (prior: 1.39)

    • 1.34 in 12 months (prior: 1.38)

Conclusion:

Goldman Sachs is increasingly confident in the Canadian dollar’s relative strength against the greenback, citing policy dynamics and early macro resilience. However, due to close US linkages, CAD may struggle to outperform broadly on the crosses.

This article was written by Adam Button at www.forexlive.com.

• Prior month 7.568 M revised to 7.480M

Hires

• Total hires: 5.4 million (unchanged)

• Hires rate: 3.4% (unchanged from last month)

• No significant changes across industries

Total Separations

• Total separations: 5.137 million (versus 5.316M last month)

• Separations rate: 3.2% (little changed)

• Increased in state and local government (ex. education): +28,000

• Decreased in federal government: -8,000

Quits

• Total quits: 3.332 million (vs 3.250 million last month)

• Quits rate: 2.1% (versus 2.0% last month)

• Decreased in transportation, warehousing, and utilities: -49,000

Layoffs and Discharges

• Total: 1.558M million (vs 1.780M last month)

• Rate: 1.0% (vs 1.1% last month)

• Decreased in:

  • Retail trade: -66,000

  • Federal government: -11,000

• Increased in:

  • State and local government (ex. education): +17,000

Other Separations

• Total: 247,000 (little changed)

This article was written by Greg Michalowski at www.forexlive.com.

• Prior was 92.5
• Present Situation Index 133.5 vs. 134.5 prior
• Expectations Index 54.4 vs 65.2 prior– lowest since 2011
• 12-month inflation expectations 7.0% vs 6.2% prior — highest since Nov 2022
• Jobs hard-to-get at 16.6 vs 16.1 prior
• April’s fall in confidence was broad-based across all age groups and most income groups
• The decline was sharpest among consumers between 35 and 55 years old,
  and consumers in households earning more than $125,000 a year

“Consumer confidence declined for a fifth consecutive month in April,
falling to levels not seen since the onset of the COVID pandemic,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board.
“The decline was largely driven by consumers’ expectations. The three
expectation components—business conditions, employment prospects, and
future income—all deteriorated sharply, reflecting pervasive pessimism
about the future. Notably, the share of consumers expecting fewer jobs
in the next six months (32.1%) was nearly as high as in April 2009, in
the middle of the Great Recession. In addition, expectations about
future income prospects turned clearly negative for the first time in
five years, suggesting that concerns about the economy have now spread
to consumers worrying about their own personal situations. However,
consumers’ views of the present have held up, containing the overall
decline in the Index.”

This article was written by Adam Button at www.forexlive.com.

A report last week said China was considering waiving ethane tariffs, along with some other goods. Now Reuters reports that it’s official.

The problem with ethane is that it was used to make plastics and putting on tariffs just drove up the costs of Chinese plastic goods.

This article was written by Adam Button at www.forexlive.com.

When it was announced that Bessent would be at the morning White House briefing, some thought he would be there to talk about an announcement. Evidently not as he re-hashed the usual talking points and added very little in the way of info around tax policy and tariffs.

S&P 500 futures have fallen about 25 points since the press conference started and are now down 29 points, or 0.5% shortly before the open. Bond yields are flat and the US dollar is firming.

Share of Amazon are down 2% in the pre-market after Leavitt said the decision to show tariff costs on goods is a ‘hostile political act’.

This article was written by Adam Button at www.forexlive.com.

• Prior was 4.7% y/y
• Monthly house price index +0.4% vs +0.4% expected

Monthly home price indicators from the FHFA:

• +0.1% m/m vs +0.2% prior (revised to +0.3%)
• +3.9% m/m vs +4.8% prior (revised to +5.0%)

This article was written by Adam Button at www.forexlive.com.

• Tariff revenue could be used for tax cuts
• I think tariffs will generate substantial revenues
• I learned to ignore survey data in my 35 years in the investment business
• Had substantial talks with Japan
• India easier to negotiate with than other countries
• Asia trading partners have been the most forthcoming

This is nothing new so far.

This article was written by Adam Button at www.forexlive.com.

• Prior month 0.3% revised to +0.5%
• Wholesale inventories advanced for March 0.5% versus 0.0% estimate
• Total: $908.0B, up 2.3% y/y.
• Retail inventories $805.8B, down -0.1% m/m. Prior month revised from +0.1% to -0.1%
• Retail inventories up 4.8% y/y
• Retail inventories Ex auto +0.4% versus 0.1% last month

This article was written by Greg Michalowski at www.forexlive.com.

• Prior was -147.91B
• Exports of goods for March were $180.8 billion, $2.2 billion more than February exports
• Imports of goods for March were $342.7 billion, $16.3 billion more than February imports

This is a surprisingly soft number and I’ve seen estimates at $145 billion. Given that there should have been some front-running of tariffs, this is likely to be the low for awhile. In any case, trade will be a major drag on Q1 GDP, in the first look tomorrow.

This article was written by Adam Button at www.forexlive.com.

• India is prepared to offer the US the “forward most favoured nation” clause

• Indian Govt: Indian, US officials meet in Washington, trade talks make positive progress
• Eurozone April final consumer confidence -16.7 vs -16.7 prelim
• ECB consumer survey shows 1 year inflation expectations rising to 2.9%
• Eurozone March M3 money supply +3.6% vs +4.0% y/y expected
• China: If US wants resolution, it should stop making threats
• ECB’s Cipollone: Trade policy uncertainty could reduce business investment
• Spain Q1 preliminary GDP +0.6% vs +0.7% q/q expected
• Spain April Flash CPI Y/Y 2.2% vs 2.0% expected
• What are the main events for today?
• Germany May GfK consumer sentiment -20.6 vs -26.0 expected
• Will sit down with Trump to discuss future ties as two sovereign nations – Carney
• FX option expiries for 29 April 10am New York cut

It’s been a pretty quiet session with no notable data or news releases. The Spanish Flash CPI was higher than expected but that won’t change ECB’s plan of cutting rates in June unless we get resolutions on the tariffs front.

The Chinese continue to repeat that they are open for dialogue but it’s pretty clear that they won’t be the first to engage in negotiations. The ECB consumer survey showed that inflation expectations have risen, while growth remained unchanged. Classic stagflationary shock due to tariffs.

We got some positive comments from the Indian Government on the trade talks although it didn’t look like there’s something concrete yet. Nonetheless, the markets will likely be fine with some details like the tariffs rate and so on, so everyone is watching out for that.

In the American session, we have the US Job Openings data and the US Consumer Confidence report. The focus though, will be on US Treasury Secretary Bessent joining the White House Briefing at 08:30 ET/12:30 GMT, and later in the day on the US Secretary of Commerce Lutnick speaking on CNBC at 18:00 GMT/14:00 ET.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• India is prepared to offer the US the “forward most favoured nation” clause as sweetener in trade talks.

A “Most Favored Nation”
(MFN) clause, also known as a “Most Favored Customer” or “Prudent Buyer”
clause, is a contractual term that guarantees a buyer or licensee
receives the same or better terms as any other buyer or licensee.Essentially,
it prevents a seller or licensor from offering better terms to another
party without also extending those terms to the party with the MFN
clause.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Step by step rate cuts may continue.
• It will depend on what happens with inflation, which depends on what happens with the labour market.

This article was written by Giuseppe Dellamotta at www.forexlive.com.