Canadian Dollar remains supported on rising Oil prices and US tariff pause
- USD/CAD remains on the back foot despite a modest US Dollar recovery.
- Higher Oil prices and improving US-Canada trade relations underpin the Canadian Dollar.
- Rebounding US Treasury yields and upbeat Jobless Claims help the US Dollar stabilise.
USD/CAD trims part of its earlier losses on Thursday as the US Dollar (USD) stages a modest recovery following the previous day’s sharp selloff. However, the pair stays on the back foot as higher Oil prices support the commodity-linked Canadian Dollar (CAD). At the time of writing, USD/CAD trades around 1.3780, hovering near a three-month low.
The Loonie also draws support from signs of progress in trade talks between the United States and Canada. US President Donald Trump has paused planned 50% tariffs on around $20 billion worth of Canadian goods for three days, saying the two countries have a deal.
Meanwhile, Oil prices stay elevated as the US-Iran standoff keeps supply concerns in focus. West Texas Intermediate (WTI) trades around $85.80 per barrel, up nearly 5% so far this week. The Canadian Dollar is highly sensitive to Oil prices because Canada is a major crude exporter.
The Greenback fell to a three-month low on Wednesday after the US Treasury announced larger buybacks of longer-dated government securities, pushing long-term yields sharply lower.
However, the move proved short-lived, with both the 10-year and 30-year Treasury yields rebounding on Thursday. Large fiscal deficits, heavy debt issuance and persistent inflation risks keep upward pressure on borrowing costs.
The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 98.80, recovering from an intraday low of 98.56, its weakest level since May 14.
Weekly US labour market data provide additional support to the Greenback. Initial Jobless Claims fell to 206K in the week ending August 15, below market expectations of 210K and the upwardly revised previous reading of 212K.
On the monetary policy front, Federal Reserve (Fed) policymakers continue to see inflation as the main risk. Strategists at Scotiabank point out that the July FOMC minutes revealed that “many” policymakers judged “tighter policy would be needed if inflation didn’t decline.” However, they argue that “recent signs of abating price pressures and some softening in the labour market” mean the “risk of a September hike is still lower than market-implied probabilities,” which they note are currently “a bit more than 30%.”
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.05% | -0.19% | 0.38% | -0.20% | 0.04% | -0.30% | 0.17% | |
| EUR | 0.05% | -0.14% | 0.45% | -0.14% | 0.08% | -0.26% | 0.22% | |
| GBP | 0.19% | 0.14% | 0.58% | -0.01% | 0.22% | -0.11% | 0.36% | |
| JPY | -0.38% | -0.45% | -0.58% | -0.58% | -0.34% | -0.69% | -0.22% | |
| CAD | 0.20% | 0.14% | 0.00% | 0.58% | 0.25% | -0.09% | 0.37% | |
| AUD | -0.04% | -0.08% | -0.22% | 0.34% | -0.25% | -0.33% | 0.12% | |
| NZD | 0.30% | 0.26% | 0.11% | 0.69% | 0.09% | 0.33% | 0.49% | |
| CHF | -0.17% | -0.22% | -0.36% | 0.22% | -0.37% | -0.12% | -0.49% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
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