- USD/CAD gains ground to around 1.3855 in Wednesday’s early Asian session.
- Weaker Canadian economic data and ongoing tariff uncertainty weigh on the Canadian Dollar.
- US job growth was far less robust in the year through March than previously reported.
The USD/CAD pair extends the rally to near 1.3855 during the early Asian session on Wednesday. The Canadian Dollar (CAD) weakens against the US Dollar (USD) as trade worries put pressure on Canada’s economy. All eyes will be on the US Producer Price Index (PPI) inflation data, which is due later on Wednesday.
An uncertain outlook for the Canadian economy supported recent moves by investors to increase bearish bets on the Loonie. Friday’s Canadian job data showed that US tariffs pressured slow hiring momentum and tightened activity across key sectors. The Unemployment Rate in Canada ticked up to 7.1% in August from 6.9% in July, above the expectation of 7.0%.
“While Canada benefits from the CUSMA deal and has one of the lowest effective tariff rates globally, tariffs on other sectors and ongoing uncertainty about a new trade deal with the U.S. continue to dampen the medium-term economic outlook,” said Kevin Ford, FX & macro strategist at Convera.
On the other hand, rising expectations that the US Federal Reserve (Fed) will deliver a jumbo rate cut at its September meeting could undermine the Greenback. US job growth came in weaker than expected in the year through March. The number of workers on payrolls will likely be revised down by a record 911K, or 0.6%, according to the preliminary benchmark revision out Tuesday. Traders will take more cues from the US PPI inflation data for August later on Wednesday, ahead of the Consumer Price Index (CPI) report.
