The Canadian dollar is facing headwinds, weakening against the US dollar as trade tensions resurface and domestic inflation cools. This is compounded by a strong US dollar supported by hawkish Federal Reserve signals, offsetting any gains from firmer oil prices. The narrowing yield advantage for Canada and renewed protectionist risks further contribute to the currency’s struggles.
- The Canadian dollar weakened toward 1.37 per US dollar.
- New US trade policy, specifically a 15% global surcharge, is creating headwinds.
- Canadian inflation cooled to 2.3%, raising bets the Bank of Canada may abandon its pause.
- The US dollar is resilient, supported by hawkish signals from the Fed and core PCE holding at 3%.
- The narrowing of Canada’s yield advantage and renewed protectionist risks are weighing on the loonie.
- USD/CAD faces resistance at 1.3700 and the 200-SMA on H4 charts.
- USD/CAD finds support near the 1.3645 region.
Overall, the Canadian dollar is experiencing downward pressure. Trade uncertainty, especially from the US, is a major factor. Weaker inflation data at home also contributes, potentially influencing the Bank of Canada’s future monetary policy decisions. While oil prices provide some support, a strong US dollar and a less attractive yield environment in Canada are limiting any potential gains for the Canadian currency.