04:22 PM EST, 01/20/2025 (MT Newswires) -- With the Trump administration take a more measured approach to trade policy than expected, the U.S. dollar came under broad pressure Monday, falling more than 1% against most major currencies, Bank of Montreal's Sal Guatieri has noted in an overnight note.

The loonie even "poked its soggy head" above 70 cents US, albeit briefly as both the threat of tariffs and a revamped USMCA "haven't gone away", he said.

Guatieri noted a Trump trade memo singled out China, Mexico and Canada for scrutiny with the intention of reducing the U.S. trade deficit. However, he said, the reprieve suggests the administration will actively debate the pros and cons of tariffs, possibly resulting in a "lighter touch" for Canada, the nation with the much smaller bilateral surplus of the three, "with targeted duties instead of the blunt 25% punch that was widely feared".

The delay, Guatieri added, also buys Canada time to formulate a response that placates the administration and, at the very least, avoids a "destructive" trade war.