Good morning. I’m Matt Lundy, economics editor. My team and I have had a close eye on trade, so we were quick to pivot when Canada got a one-month reprieve from U.S. President Donald Trump’s 25-per-cent tariffs.

It seems there was some wiggle room on the matter after a second phone call, with Prime Minister Justin Trudeau promising to invest $200-million more to fight organized crime and drugs and appoint a “fentanyl czar.”

But even with a delay, the threat of tariffs casts a dark cloud over the livelihoods of many Canadians and Americans. Even if the pause does provide Canadian businesses with a bit of breathing room to prepare for levies. Maybe Campbell Clark said it best: Oh how Trump loves to leave his neighbours hanging on his whim. More on all that, but first:

Evolve Funds Group Inc. plans Canada’s first leveraged crypto ETFs, hoping to draw back investor dollars from U.S. funds

Joriki Inc., the beverage maker linked to listeria outbreak, was struggling financially before recall, court filings show

StackAdapt Inc. will announce that the Ontario Teachers’ Pension Plan has led a US$235-million financing, backed by Intrepid Growth Partners and four other investors

• Follow more trade news with our Canadian tariff war journal.
• U.S. data on job openings and factory orders for December will be released.
• Earnings include: Advanced Micro Devices Inc., Allied Properties REIT, Alphabet Inc., Amgen Inc., Chipotle Mexican Grill Inc., Finning International Inc., Merck & Co. Inc., PayPal Holdings Inc., Pepsico Inc., Pfizer Inc. and Spotify Technology SA

For many Canadians, following the value of the Canadian dollar is akin to a national sport. And lately, it feels like we’re cheering on a hapless squad with no shot at making the playoffs (so, like the Toronto Raptors).

On Sunday, the Canadian dollar plunged below 68 US cents as investors absorbed Saturday’s news that U.S. President Donald Trump was pressing ahead with his tariff threats on Canada and Mexico.

Then on Monday afternoon, as news broke that tariffs on Canada would be delayed by a month, similar to what happened with Mexico earlier in the day, the Canadian dollar soared above 69 US cents.

Put another way, if you want to gauge how the country’s trade skirmish with the U.S. is going, there is no better indicator than the Canadian dollar.

Here’s a cheat sheet: If the loonie takes a dip, Trump said something threatening about Canada. When it rises, the prospect of a trade war diminishes.

Equity markets, by contrast, have been generally cheerful during weeks of Trump’s threats. Between the presidential election day and last weekend, the S&P 500 had risen 4.5 per cent, bolstered by Trump’s aims to lower taxes and regulations on business.

Yesterday played out differently. Canadian and U.S. stock indices opened sharply lower, before clawing back some ground. The S&P 500 and Dow Jones Industrial Average fell 0.8 per cent and 0.3 per cent, respectively, on the day – a timid response to a potential trade war. Canada’s benchmark stock index dropped 1.1 per cent.

It’s likely that stocks will rebound on today. The news of the tariff pause was announced after market close.

Currency markets, however, are where the action is. And it’s been that way for a while.

There’s quite a lot working against the loonie of late: a U.S. dollar that’s dominating all major currencies, the sluggish Canadian economy, and the interest-rate policy divergence between the Bank of Canada and its U.S. counterpart, the Federal Reserve.

But tariff threats are a huge part of the loonie’s beleaguered status.

“The recent depreciation we’ve seen in the Canadian dollar has been more driven, in our view, by trade uncertainty, and particularly President Trump’s threats to impose 25-per-cent tariffs on Canadian exports,” Bank of Canada Governor Tiff Macklem explained at last week’s rate decision.

If tariffs went ahead in a month, the depreciation in the Canadian dollar would help to offset some of their impact, allowing domestic exporters to remain somewhat competitive in the U.S. market.

Conversely, the weaker loonie makes our imports from the U.S. more expensive. Get ready for pricier fruits and vegetables, which have a faster pass-through to consumers.

Before yesterday’s announcement, many economists and currency analysts forecast that the Canadian dollar could erode to roughly 66 US cents in a lengthy trade war.

Yes, the loonie is like a car crash that you can’t look away from.

But right now, it may be the easiest way to track Canada-U.S. relations.