FX Monthly Update | March 2025

Economic Outlook and Summary

Trump’s rhetoric took center stage. His determination to slap tariffs on Canada, Mexico, and China while promising reciprocal tariffs on all countries exporting to America sparked fresh worries about trade disruptions and recessions.

The U.S. Dollar Index chopped its way through February, caught between rising inflation fears and shifting Fed rate expectations. Equity markets came under stress, fueled by the sell-off in the “Magnificent Seven” tech stocks, which dragged the S&P 500, Dow Jones, and Nasdaq Composite lower.

Gold was the big winner in February, hitting new all-time highs as traders sought safety amid uncertainty.

Looking ahead to March, markets will stay laser-focused on Trump’s trade policies. He followed through on his tariff promises and slapped 25% tariffs on Canada and Mexico and 20% on China on March 4. The next day, after realizing the U.S. auto manufacturing industry would essentially shut down in four days, he exempted autos from the tariffs—but just until April. Tech stocks face a critical test—will they rebound, or is there more pain ahead? Trump isn’t finished. He is attempting (and apparently succeeding) in extorting 50% of Ukraine’s minerals for past services rendered.

The Canadian Dollar and Bank of Canada

The Canadian dollar had a topsy-turvy month but managed to stay in a USDCAD range of 1.4370-1.4550. That changed as February rolled into March and Trump announced that tariffs would go ahead as planned, despite making Canadian officials jump through hoops all February. The President declared a National Emergency due to massive amounts of fentanyl entering the U.S. from Canada. Canada’s GDP surprised to the upside, which gave the illusion of economic growth, but it was tainted by falling productivity. The economic threat posed by Trump’s tariff actions means that the Bank of Canada will lower rates again on March 12.

Oil Prices

Oil prices consolidated their January losses in a 67.80-75.27 range, then fell to 65.10 on March 3. The fall was due to ongoing stress after OPEC+Russia announced a production increase in April and fears that Trump’s trade war would lower global crude demand even as production increased. Furthermore, China continues to struggle to jumpstart its economy, which is a key factor weighing on crude prices.

Forecast Table

Forecast Table is for mid-market rates, and subject to change anytime.