CAD Weakness Continues Amid Oil Price Decline and BoC Dovishness

The Canadian Dollar (CAD) has declined due to falling oil prices and a dovish outlook from the Bank of Canada (BoC). The USD/CAD exchange rate gained 0.27% on Tuesday, trading around 1.4070 at the time of writing.

Falling West Texas Intermediate (WTI) US Oil prices weighed heavily on the CAD, as Canada is a major oil producer and exporter. Despite improving risk appetite, which typically benefits the Canadian Dollar, the decline in oil prices offset this positive impact.

The Bank of Canada's (BoC) dovish outlook also contributed to the CAD's weakness. National Bank of Canada stated that domestic conditions argue for patience from the BoC, with economic momentum threatened and slack remaining. This view was echoed by Boston Federal Reserve President Susan Collins, who supported last week's interest-rate hike and viewed a somewhat more restrictive monetary policy stance as appropriate to bring inflation sustainably back toward the Fed's 2% target.