Canadian Dollar Heads for Second Weekly Loss Amid Rising US Yields

The Canadian Dollar is facing its second consecutive weekly decline despite a recent pullback in the US Dollar's rally. The USD/CAD pair remains elevated near mid-July levels, with traders looking ahead to key economic data releases next week.

Oil prices have risen, one of Canada's main exports, but this has not provided sufficient support for the Loonie. Instead, the Canadian Dollar is under pressure due to the interest rate differential between the US and Canada, as well as higher US yields.

The Bank of Canada Governor Tiff Macklem recently warned that tariffs could push Canadian fourth-quarter growth below 1%. Next week's key data releases include the US Personal Consumption Expenditures (PCE) inflation report, the ISM Manufacturing Purchasing Managers' Index (PMI), and Nonfarm Payrolls.

As of now, the USD/CAD pair trades around 1.4141, near levels last seen in mid-July. The two-year US Treasury yield stands at 4.87%, while Canada's two-year government bond yield is around 3.35%.