Market conditions suggest the Canadian dollar is facing headwinds, weakening against the US dollar amid a mix of domestic and international pressures. Trade tensions reintroduced by new US tariffs, coupled with cooling Canadian inflation and a resilient US dollar, are contributing to the currency’s struggles.
- Canadian dollar weakened towards 1.37 per US dollar.
- New US tariffs pose a headwind for Canada’s export economy.
- Canadian inflation cooled to 2.3%, raising bets of a potential Bank of Canada policy shift.
- Resilient US dollar, supported by hawkish Fed signals, added pressure.
- USD/CAD trades firmly near the weekly high around 1.3700 amid firm US Dollar.
- Investors await the Canadian Q4 GDP data.
Overall, the factors discussed suggest a challenging near-term outlook for the Canadian dollar. The combination of trade uncertainty, potentially dovish monetary policy adjustments, and a strong US dollar creates an environment where the Canadian dollar is likely to remain under pressure.