Canadian dollar rallies on ‘positive’ mood of Carney, Trump meeting

Canadian Prime Minister Mark Carney is greeted by President Donald Trump, left, as he arrives at the West Wing of the White House on Tuesday in Washington. Photo by Mark Schiefelbein/The Associated Press

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The Canadian dollar rallied on the “positive” mood displayed during the meeting between Prime Minister Mark Carney and United States President Donald Trump at the White House on Tuesday.

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After winning the federal election a little more than a week ago, Carney travelled to Washington, D.C., to get talks started with Trump on trade and tariffs.

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The loonie rallied 0.3 per cent against its U.S. counterpart, hitting 72.7 cents U.S., a seven-month high, after Carney arrived at the White House and the question and answer session with the press got underway.

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Trump complimented the prime minister on his election win, describing it as “probably one of the greatest comebacks in the history of politics, maybe even greater than mine.”

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The president added that he and Carney “have a lot of things in common, but have some tough, tough points to go over and that will be fine.”

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Carney told Trump that Canada won’t “ever” be for sale, but “the opportunity is the partnership and what we can build together.”

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Karl Schamotta, chief market strategist at Corpay Currency Research, attributed the Canadian dollar’s rise to early signs from the meeting that a full-blown crisis over tariffs can be averted.

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“Evidence of a relatively warm relationship between the two leaders was on display, giving investors hope that a confidence-shattering escalatory tariff cycle can be avoided in the future,” he said in an email.

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Royce Mendes, managing director and head of macro strategy at Desjardins Group, also described the overall tone of the meeting and press conference as “positive,” noting that the Canadian dollar and S&P/TSX composite index ralled during the event.

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However, “loonie bulls are treading cautiously,” Schamotta said, given that Trump’s flattering words, at least for Carney, run in sharp contrast to his actions on the tariff front since he regained office on Jan. 20.

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A social media post made by the president shortly before Carney was scheduled to arrive at the White House showed Trump hasn’t abandoned his complaints regarding Canada.

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Posting on the Truth Social platform, the president repeated his complaint that the U.S. was spending US$200 billion a year to subsidize Canada and it is providing free military protection. He also repeated earlier claims that the U.S. doesn’t need Canada’s cars, lumber or energy.

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“The Canadian dollar’s rally may have further to go,” Schamotta said, adding that “it will trade at a discount to other major currencies for the foreseeable future as investors hedge trade risks.”

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