Trump Pauses Tariffs, Oil Prices Surge: CAD Gains Ground Against USD

The Canadian Dollar strengthened on Wednesday due to the US President Donald Trump's decision to pause the implementation of 50% tariffs against Canada for three days. This move provided relief on the trade front and supported the Loonie, although the short duration of the suspension maintains significant uncertainty over the outcome of the negotiations.

Rising Oil prices also contributed to the Canadian Dollar's gain, as tensions between Washington and Tehran over the Strait of Hormuz reinforced concerns about global supply. Crude Oil prices reached a nearly three-week high.

The US Dollar struggled to recover after reaching a two-month low on Monday, due to recent US economic data showing signs of cooling inflation and slowing consumer spending. This prompted investors to scale back expectations of an immediate monetary policy tightening by the Federal Reserve.