- USD/CAD attracts some buyers for the second straight day amid a combination of supporting factors.
- Tumbling Oil prices, domestic political uncertainty, and Friday’s dismal jobs data undermine the Loonie.
- The risk-off mood benefits the USD’s relative safe-haven status and also acts as a tailwind for the pair.
The USD/CAD pair attracts some follow-through buying for the second consecutive day on Monday and looks to build on last week’s modest recovery from the 1.4030-1.4025 region or year-to-date low. Spot prices currently trade around mid-1.4200s, up nearly 0.25% for the day, though bulls might wait for a sustained strength beyond the 100-day Simple Moving Average (SMA) before placing fresh amid mixed fundamental cues.
Crude Oil prices slump to a four-year low amid growing concerns that US President Donald Trump’s sweeping reciprocal tariffs would trigger an all-out global trade war and weaken fuel demand. Moreover, eight OPEC+ members unexpectedly advanced their plan to phase out production cuts, sparking oversupply concerns and further weighing on the black liquid. Apart from this, political uncertainty ahead of the Canadian snap election on April 28, along with Friday’s disappointing domestic employment data, undermines the commodity-linked Loonie and acts as a tailwind for the USD/CAD pair.
Meanwhile, the risk of a further escalation of US-Canada trade tensions suggests that the path of least resistance for the currency pair is to the upside. In fact, Canadian Prime Minister Mark Carney said on Thursday that the previously announced retaliatory tariffs will remain in effect and that Canada will impose 25% tariffs on all vehicles imported from the US that are not compliant with the USMCA trade deal. This, along with the emergence of some US Dollar (USD) buying following the Asian session dip, turns out to be another factor offering additional support to the USD/CAD pair.
The USD preserves Friday’s modest recovery gains from a multi-month low on the back of stronger-than-expected US Nonfarm Payrolls (NFP) report and Federal Reserve (Fed) Chair Jerome Powell’s hawkish remarks. Adding to this, the prevalent risk-off environment is seen benefiting the Greenback’s relative safe-haven status. Any meaningful USD appreciation, however, still seems elusive in the wake of bets that a tariffs-driven US economic slowdown might force the Fed to resume its rate-cutting cycle soon. This, in turn, might keep a lid on the USD/CAD pair, warranting caution for bulls.
