- USD/CAD flat lines near 1.3725 in Monday’s early Asian session.
- Tariff uncertainty continues to undermine the Canadian Dollar.
- BoC Business Outlook Survey will be the highlight later on Monday.
The USD/CAD pair trades on a flat note near 1.3725 during the early Asian session on Monday. Tariff uncertainty might continue to weigh on the Canadian Dollar (CAD) against the US Dollar (USD). Traders await the release of the Bank of Canada (BoC) Business Outlook Survey for fresh impetus, which will be published later on Monday.
US President Donald Trump threatened a 35% tariff on goods imported from Canada. US Commerce Secretary Howard Lutnick on Friday dismissed the question of whether US free trade with Canada is dead, calling the notion “silly” and saying a substantial amount of Canadian goods enter the US tariff-free under the current North American free trade deal. The uncertainty surrounding the new tariff rate raises concerns over a renewed trade war between the US and one of its most important trading partners, which could undermine the CAD.
However, dovish comments from the Federal Reserve (Fed) might cap the upside for the Greenback. Fed Governor Christopher Waller said late Thursday that the labor market is doing fine overall but less so in the private sector. Waller believes that the Fed should reduce its interest rate target at the July meeting, citing mounting economic risks. Financial markets are now pricing in a September starting date for rate cuts, and Fed officials penciled in two easings later this year, according to Reuters.
Furthermore, a rebound in Crude Oil prices could support the commodity-linked Loonie lower in the near term. It’s worth noting that Canada is the largest oil exporter to the US and higher crude oil prices tend to have a positive impact on the CAD value.
