06:47 AM EST, 03/07/2025 (MT Newswires) -- The Canadian dollar rallied Thursday on the United States announcement that USMCA-compliant products would be exempt from tariffs until April 2, noted ING.

Almost all U.S.-Canada-Mexico trade falls under USMCA, even though not all exporters are compliant with the Agreement's rules, wrote the bank in a note.

Markets had never priced in 25% tariffs as a long-lasting measure, and USD/CAD had already corrected from the highs before Thursday's move, stated ING.

Friday at 8:30 a.m. ET, the bank will be watching the Canadian Labour Force Survey (LFS) for February ahead of next week's Bank of Canada meeting. Consensus is for a 20,000 change in employment and ING thinks markets will need to see a very strong figure to cast doubts on a policy cut next Wednesday.

The bank believes the downside risks for USD/CAD are limited, given the prospect of Canada still being hit by reciprocal tariffs in April.

A return to 1.44 in the coming weeks is entirely possible, but Friday's U.S. payrolls (NFP) can still add some pressure, according to ING.