Loonie Weakens Ahead of US Tariff Deadline

The Canadian dollar slipped against its US counterpart on Tuesday as investors weighed the chances of Canada securing a deal to avoid new tariffs on its exports. The loonie, as it's known, fell 0.2% to C$1.39 per US dollar, or 71.94 US cents, after reaching its strongest level in over two months at C$1.3842 per US dollar on Monday.

The tariff pressure comes as Canada seeks a last-minute agreement with the US to prevent new 50% tariffs from taking effect at midnight on Wednesday. The proposed tariffs would cover around $20 billion worth of imports from Canada, including oil, which has been supporting the Canadian dollar despite the tariff concerns.

Oil prices rose 0.6% to $85.03 a barrel as fading hopes for an agreement to end the war in the Middle East fueled concerns about disruptions to energy supplies. However, some analysts are predicting that a durable agreement could push USD/CAD toward 1.37, while others warn of further escalation in tensions sending the pair back above 1.40.