USD/CAD Surges as Oil Prices Decline and Trade Tensions Mount

The USD/CAD pair has extended its gains, reaching new highs above $1.40 as oil prices decline and trade tensions between the US and Canada weigh on the Canadian Dollar.

Falling crude prices have eased prior worries about supply constraints, but for Canada this is a negative development, as oil is a key export for the country.

The interest rate spread between the US and Canada has also widened, with the Bank of Canada leaving its key policy rate unchanged at 2.25% while the US Federal Reserve raised rates last Wednesday.

Trade tensions have added another headwind for the Canadian currency, with tariffs imposed by both countries contributing to the CAD's underperformance relative to the US Dollar.