Canada's Loonie Weakens on Oil Price Drop and Tariff Threat

The Canadian dollar weakened against the US dollar on Tuesday as oil prices dropped, despite data showing Canada's fourth consecutive month of trade surpluses.

Data revealed that Canada's trade surplus reached a four-year high of C$3.86 billion ($2.75 billion) in June, beating analysts' forecasts of C$3 billion.

Andrew Grantham, senior economist at CIBC Capital Markets, noted that the surge in exports was a major driver of the strength in GDP signalled for Q2, but warned that new tariffs looming could slow or stall this growth.

Preliminary data pointed to Canada's economy growing by 3.4% in the second quarter on an annualized basis, while separate data showed the country's manufacturing sector expanded in July at the fastest pace in over four years.