USD/CAD Holds Near 1.3900 Amid Tariffs Uncertainty and Higher Yields

The USD/CAD pair continues to oscillate around the 1.3900 mark during the Asian session on Wednesday, following modest recovery from its lowest level since June 3.

Traders seem hesitant to place aggressive bets ahead of a high-stakes US tariffs deadline and the release of FOMC Minutes, with US President Donald Trump and Canadian Prime Minister Mark Carney engaged in last-minute talks to reach an agreement and avert 50% US tariffs on $20 billion worth of Canadian products.

The long end of the curve is increasingly dictating financial conditions, as highlighted by BNY's Geoff Yu, who notes that 'bond prices are sending warnings' with the 30y U.S. Treasury yield having moved above 5.3%, its highest since 2007.