Canadian Dollar Slips Amid US Dollar Strength and Tariff Tensions

The Canadian dollar has slipped in value alongside the Norwegian krone due to broader US dollar strength and softer oil prices.

This weakness has weighed on the currency, causing it to edge lower. The USD/CAD pair is trading near Scotiabank's fair value estimate of 1.3862, despite Canada introducing retaliatory tariffs of 15-50% on $20bn of US goods, effective September 8.

The bank expects the tariff announcement to have only a limited market effect. However, trade frictions are filtering into North American investment risk, with reports suggesting Honda may avoid building new plants in the region unless CUSMA is renewed.

USD/CAD has been holding above its 200-day moving average at 1.3842, while the intraday DMI indicator remains neutral. The pair could extend towards the mid-to-upper 1.39s, with support seen at 1.3825/30 and then 1.3775/85.