Trade Tensions Dominate Canadian Dollar Outlook Amid Data-Light Week

A data-light week in Canada is expected to keep attention focused on Canadian-US trade tensions as Canadian countertariffs take effect. The US has already signaled plans to retaliate with higher tariffs on Canadian vehicles from January 1st.

TD Securities notes that without any significant domestic economic data, the spotlight will remain on North American trade tensions. This includes monitoring for any new threats of retaliation over the coming week.

Market attention is also set to shift towards key drivers of risk sentiment: US Consumer Price Index (CPI) and the European Central Bank's meeting this week. These events are expected to impact the Canadian Dollar through trade and rate expectations.