Markets have been here before with tariff threats and there are still four days for deals to be cut, ING’s FX analysts Chris Turner notes.

Markets continue to see downside risks to the Canadian dollar

"Turning to Canada and Mexico, it seems Mexico is most likely to cut a deal given that it's probably got the most to lose. The Mexican peso is actually holding in quite well - presumably on the view that a deal would be cut. The chances of a deal with Canada might be lower in that the beleaguered Liberal party is performing well as it stands up to the US."

"And Canada might be more resistant to being bounced out of other trade agreements, such as the CPTPP. This is an agreement with several partners in Asia, including Vietnam and may well be seen by the US as a back-door route for Chinese products to enter the US."

"We continue to see downside risks to the Canadian dollar, with USD/CAD potentially trading at 1.48 should tariffs be implemented."