CAD Submerges as Trade Uncertainty Weighs on Economic Growth

The Canadian dollar is experiencing a decline due to a combination of factors, including widening interest-rate differentials between Canada and the US, softer crude prices, and renewed trade tensions. Bank of Canada Governor Tiff Macklem's recent comments acknowledged the challenges facing the economy, citing 'stages of grief' following the demise of open trade with the US.

Macklem stated that trade uncertainty is weighing on economic growth and the Middle East conflict is creating additional inflationary pressure. This leaves the Bank caught between competing forces, making it difficult to justify a clear move toward either higher or lower interest rates.

Meanwhile, hopes are rising for a diplomatic solution to reopen the Strait of Hormuz after US President Trump expressed openness to meeting Iranian President Pezeshkian. The US dollar opened steady but with a bid, while the Canadian dollar traded in a range of 1.4025-1.4050.