USD/CAD dips slightly but Canadian dollar underperforms as crude prices drop and trade deal uncertainty persists.
The Canadian dollar shows muted gains against the USD despite easing geopolitical tensions, as WTI crude oil falls $4.46 to $80.42. The decline follows expectations of increased oil flows through the Strait of Hormuz, reducing supply risks but pressuring commodity-linked currencies like the loonie.
While the Australian dollar benefits from a broader risk-on rally, the CAD remains constrained by weaker oil prices and lingering trade concerns. Analysts warn that President Trump may target the USMCA agreement next, with potential withdrawal threats as early as July to gain leverage in negotiations. Such moves could weigh on both CAD and MXN.
Domestic economic data remains stable, but the loonie’s performance is overshadowed by external factors, including shifting USD dynamics as emerging market risks decline.