The Canadian Dollar weakens despite a 0.6% rise in Oil prices, as US-Canada trade tensions and steady US inflation support the USD.
USD/CAD rose 0.3% to 1.3880 on Wednesday, driven by renewed trade tensions between the US and Canada, which pressured the Canadian Dollar. The US Dollar found support from July’s PCE inflation data, holding steady at 3.7% YoY, above market expectations of 3.6%. Core PCE remained at 3.3%, in line with consensus.
Oil prices gained 0.6% to $81.20, providing some relief to the commodity-linked Loonie. However, the currency’s upside was limited by broader trade concerns. Markets now await Fed Chair remarks at the Jackson Hole Symposium for clues on US monetary policy amid persistent inflation.
The Canadian Dollar remains caught between opposing forces—higher energy prices and escalating trade disputes. As a major Oil exporter to the US, Canada typically benefits from rising energy costs, but geopolitical risks continue to weigh on sentiment.