08:43 AM EDT, 04/08/2025 (MT Newswires) -- The Canadian dollar (CAD or loonie) outperformed high-beta peers around the globe on Liberation Day last week when the United States introduced reciprocal trade tariffs as Canada was left out of the list of tariffed nations, said UBS.

The major question is whether Canada is off the hook for good

or merely bought itself some time, wrote the bank in a note to clients.

UBS thinks the reality lies somewhere in between. Neither is Canada on top of President Donald Trump's list, nor will the country get away unscathed.

After all, large levies have already been imposed on industries such as cars, and more sectoral tariffs are looming, stated the bank.

This translates into short-term USDCAD upside risks, which are still well reflected in the bank's unchanged June forecast of 1.46.

Over time, however, the pair should trade lower as US dollar (USD) weakness takes hold more broadly. UBS targets 1.42 by March 2026.