Loonie Slumps Amid Oil Price Drop and Tariff Threat

The Canadian dollar experienced its lowest level in six days due to a decline in oil prices. The loonie dropped by 0.2% against the US dollar, trading at 1.4070 per USD or 71.07 cents. This comes despite Canada's trade surplus reaching a four-year high of $3.86 billion in June.

According to Andrew Grantham, senior economist at CIBC Capital Markets, the surge in exports contributed significantly to Canada's GDP growth in Q2. However, he cautioned that this could slow or stall due to the threat of new tariffs. Preliminary data indicates a 3.4% annualized increase in Canada's economy for the second quarter.

Oil prices fell by 5.7% to $75.80 per barrel after comments from Qatari and US officials raised hopes for a diplomatic resolution to the Iran war, potentially improving oil flows through the Strait of Hormuz.