Retaliatory tariffs and an 8% drop in Brent crude push the loonie lower ahead of key US inflation data.
The Canadian dollar erased earlier gains against the US dollar, trading near 1.3867 as oil prices retreated and trade tensions flared. Brent crude fell to $85.70, down nearly 8% from last week’s high above $93.00, pressuring the commodity-linked currency.
Canada imposed tariffs of up to 50% on US goods after negotiations failed, prompting threats of new US levies on Canadian autos and steel. The dispute adds to headwinds for the loonie, which remains sensitive to energy markets and cross-border trade flows.
Markets await the US PCE Price Index release later Wednesday, with investors cautious ahead of potential Fed signals at Jackson Hole. The data could sway USD direction, further impacting CAD pairs.