Trump Pauses Tariffs, CAD Strengthens Amid Rising Oil Prices
Canadian Dollar (CAD) strengthened on Wednesday after US President Donald Trump paused the implementation of 50% tariffs against Canada for three days. The decision was made following negotiations with Canadian Prime Minister Mark Carney, and although the short duration maintains significant uncertainty over the outcome of the negotiations, it provides some relief to trade tensions between the United States (US) and Canada.
The CAD also benefited from rising Oil prices, which reached a nearly three-week high due to concerns about global supply stemming from tensions between Washington and Tehran over the Strait of Hormuz. Crude Oil prices have historically been supportive of the Canadian currency given its role as a major energy supplier to the United States.
The US Dollar (USD) remains under pressure ahead of the Federal Reserve's (Fed) Minutes, which are closely watched for fresh clues about interest-rate outlook. Recent US economic data show signs of cooling inflation and slowing consumer spending, prompting investors to scale back expectations of an immediate monetary policy tightening by the Fed.