**USD/CAD Extends Losing Streak Amid Heightened Trade Tensions**
The U.S. dollar recently extended its losing streak against the Canadian dollar for a third straight session, as rising trade-related anxieties continued to place pressure on the greenback. Currencies have been especially volatile amid growing concerns surrounding global interest rates, supply chain disruptions, and geopolitical tensions that have impacted commodities and prompted caution among market participants. The USD/CAD pair has proven to be sensitive to such macroeconomic events, reflecting a complex interplay between the U.S. dollar’s perceived safe-haven appeal and the Canadian dollar’s link to oil prices.
The original author of the report is Kathy Lewis, and key details from her article have been expanded below along with additional information from trusted financial sources such as Reuters, Bloomberg, and Trading Economics to provide further context.
## Key Points Behind USD/CAD Weakness
Several factors have contributed to the recent weakness of the U.S. dollar against the Canadian dollar:
– **Trade Tensions and Policy Uncertainty**: Escalating rhetoric around trade protectionism has sparked fears of reduced global trade flows. Market participants have scaled back exposure to the dollar amid uncertainty over U.S. trade policy, particularly given the ongoing friction with major partners like China and the European Union.
– **Oil Prices and the Canadian Dollar**: The Canadian dollar often moves in tandem with oil prices due to Canada’s substantial exports of crude oil. West Texas Intermediate (WTI) crude has posted modest gains in recent days, giving the loonie a natural boost against the dollar.
– **Weaker Than Expected U.S. Data**: A recent string of economic prints from the U.S. has missed expectations, pointing towards a potential softening of domestic growth. This has increased speculation that the Federal Reserve may slow or pause its rate hike trajectory.
– **Technical Trends Favoring CAD**: From a technical perspective, the USD/CAD pair has breached short-term support levels, which suggests further downside is possible if economic fundamentals remain unchanged.
## USD/CAD at a Glance
As of midweek trading, USD/CAD was observed below the 1.3300 handle, marking a significant retracement from earlier monthly highs. This move corresponds with retreating U.S. Treasury yields and weaker U.S. economic indicators, including contractionary signals from the ISM Manufacturing Index and softer job growth figures.
### Recent USD/CAD Performance:
– **Three consecutive daily declines**
– **Breaking below 1.3300 psychological support level**
– **Short-term bearish trend in momentum indicators**
– **Decline partially offset by ongoing Bank of Canada caution**
## Economic Data Influencing the USD
Several indicators have pointed towards diminishing strength in the U.S. economy, adding pressure on the dollar.
– **ISM Manufacturing PMI**: The latest report showed continued contraction in the U.S. factory sector, with the index falling below the 50 threshold for the third consecutive month, indicating a shrinking manufacturing base.
– **Nonfarm Payrolls (NFP)**: The most recent jobs report was below expectations, with job growth showing signs of moderation. This suggests the labor market may finally be cooling, reducing expectations for aggressive rate hikes from the Federal Reserve.
– **CPI Inflation Data**: While inflation has moderated from its multi-decade highs, core inflation remains sticky. This puts the Fed in a tight position between supporting growth and taming price pressures.
## Canadian Economic Outlook & Its Impact on CAD
Despite global uncertainties, the Canadian economy has remained relatively stable, aided by natural resource exports and solid domestic demand.
– **Retail and Employment Data**: Consumer spending remains firm in Canada, and the labor market shows resilience, with steady wage growth and job creation.
– **Bank of Canada Policy**: The Bank of Canada (BoC) remains watchful but has shown a relatively more hawkish outlook compared to the Fed. If Canadian inflation remains around target and economic data remain robust, investors may
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