The USD/CAD pair dipped to 1.4430 during Thursday’s late American session, weighed down by lower US bond yields. However, declining crude oil prices could limit losses for the pair, as Canada’s currency remains closely tied to commodity price movements.
Key Market Drivers
US Economic Data & Trade Concerns:
The US Producer Price Index (PPI) rose 3.2% YoY in February, slowing from 3.7% in January and falling short of the 3.3% forecast, adding to concerns about slowing US economic growth. Meanwhile, President Donald Trump’s tariff threats are fueling fears of an escalating trade war, adding further downside risks to the US Dollar.
Bank of Canada’s (BoC) Rate Cut:
The BoC cut its benchmark interest rate by 25 basis points to 2.75%, marking its seventh consecutive rate cut. BoC Governor Tiff Macklem emphasized a cautious approach moving forward, balancing inflationary risks from tariffs and weaker demand pressures.
Crude Oil Impact on CAD:
Lower crude oil prices due to trade tensions could weaken the CAD, as Canada is the largest oil exporter to the US.
Technical Outlook: Key Levels to Watch
Support: 1.4380, followed by 1.4300
Resistance: 1.4475, with further upside towards 1.4520
Traders are closely monitoring US-Michigan Consumer Sentiment data on Friday, alongside developments in Trump’s trade policies, which could significantly impact USD/CAD movements in the coming sessions.
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