The Canadian dollar clawed back some of its recent declines against its U.S. counterpart on Tuesday as the greenback posted broad-based losses and investors doubted that hefty U.S. tariffs on Canadian goods would be sustained.

Price action in the Mexican peso and Canadian dollar suggests markets are hopeful U.S. tariffs won't remain in place for long, MUFG Bank's Lee Hardman said in a note. The initial falls in the two currencies look relatively modest given the scale of tariffs,

The Canadian dollar and Mexican peso fell to one-month lows after U.S. President Donald Trump levied steep tariffs on the countries, although a fall in the U.S. dollar on the back of weak economic data limited the broader impact on Tuesday.