Canadian Dollar Falls After U.S. Imposes Tariffs On Canada Lumber

The Canadian dollar declined against its major counterparts in the Asian session on Tuesday, after the U.S. President Donald Trump slapped tariffs on imported softwood lumber from Canada, worsening relations between the two nations.

"We're going to be putting a 20% tax on softwood lumber coming in -- tariff on softwood coming into the United States from Canada," Trump said at a gathering of conservative journalists at White House.

U.S. Commerce Secretary Wilbur Ross reiterated Trump's remarks in a statement afterward, saying his department will impose new anti-subsidy duties averaging 20 percent on Canadian softwood lumber imports, as they are unfairly subsidized.

Canadian government condemned the decision and said that it would vigorously defend the interests of the Canadian softwood lumber industry, including through litigation.

Meanwhile, Asian markets are trading higher following the global rally on Monday after encouraging results from the French presidential election helped ease worries over political instability in Europe.

The loonie showed mixed performance on Tuesday. While the currency dropped against the euro and the aussie, it rose against the yen. Against the greenback, it held steady.

The loonie fell to a 5-1/2-month low of 1.4753 against the euro and a 4-day low of 80.86 against the yen, from yesterday's closing quotes of 1.4666 and 81.31, respectively. Continuation of the loonie's downtrend may see it challenging support around 1.49 against the euro and 78.00 against the yen.

The loonie dropped to nearly a 4-month low of 1.3566 versus the greenback and nearly a 4-week low of 1.0253 versus the aussie, from yesterday's closing quotes of 1.3498 and 1.0215, respectively. The next possible support for the loonie may be found around 1.38 against the greenback and 1.04 against the aussie.

Looking ahead, U.K. public sector finance data for March is set for release in the European session.

In the New York session, U.S. S&P/Case-Shiller home price index and Federal Housing Finance Agency's house price index for February, new home sales for March and consumer confidence for April are due.