Falling crude prices and soft US data weigh on the CAD, lifting the pair to 1.4190 amid dovish BoC expectations.
USD/CAD climbed to 1.4190 in Asian trading Friday, reversing modest losses as declining oil prices weakened the Canadian Dollar. The pair’s gains reflect broader pressure on the CAD from easing geopolitical tensions in the Middle East, which have reduced the risk premium on crude and dragged energy prices lower.
Canada’s manufacturing sector showed slight improvement, with the S&P Global PMI rising to 53 in June from 52.9 in May. However, the uptick failed to counterbalance the drag from cheaper oil, which is curbing energy-driven inflation and fueling bets on a more accommodative Bank of Canada.
The US Dollar held firm despite lackluster economic data, as traders weighed the Fed’s policy outlook against the BoC’s potential shift. Lower oil prices may further dampen Canada’s inflation trajectory, reinforcing expectations for a dovish pivot.