Loonie Loses Momentum Amid US-Canada Trade Tensions

The Canadian Dollar is struggling to benefit from the stability of the US Dollar due to escalating trade tensions between the two countries. The US has imposed tariffs of 50% on a range of Canadian goods, with Canada retaliating by imposing tariffs of up to 50% on around $20 billion worth of US imports.

Despite some support from oil prices, which maintain a premium in the energy market due to geopolitical risks, the Loonie is limited in its ability to strengthen. The trade dispute is raising concerns about a more pronounced impact on Canadian economic activity.

Investors are awaiting Fed Chair Kevin Warsh's speech at the Jackson Hole Symposium for fresh indications about interest rates. The US inflation data have reinforced market caution, with the Personal Consumption Expenditures Price Index standing at 3.7% YoY in July.