New US tariffs on $20bn of Canadian goods and retaliatory measures weigh on the Loonie despite a softer US Dollar.
The USD/CAD pair trades near 1.3800, up 0.30% on Monday, reversing a three-day decline after hitting a three-month low. The move follows the US imposing 50% tariffs on $20bn of Canadian goods over the weekend, with Canada vowing retaliatory tariffs starting September 8.
A modest pullback in crude oil prices and trade tensions support the USD/CAD pair, though a weaker USD limits gains. The US Dollar hovers near three-month lows as Fed rate hike expectations fade, and US Treasury buybacks weigh on bond yields.
Geopolitical risks, including upcoming US sanctions on Iran, add to market uncertainty but have not significantly shifted the USD/CAD outlook.