- USD/CAD depreciates as the Canadian Dollar receives support from expectations of the BoC keeping rates steady on Wednesday.
- The commodity-linked CAD gains ground due to improved crude Oil prices.
- Trump plans to increase import tariffs from 25% to 50% to secure the US steel industry.
USD/CAD extends its losses for the second successive session, trading around 1.3720 during the Asian hours on Monday. The Canadian Dollar (CAD) continues to gain ground against the US Dollar (USD) following stronger-than-expected Gross Domestic Product (GDP) Annualized reinforced odds of the Bank of Canada (BoC) holding interest rates steady at its meeting on Wednesday.
Canada’s economy grew at an annualized rate of 2.2% in the first quarter, surpassing the expected 1.7% growth, driven by a front-loading of exports and business inventories amid rising potential of US tariffs.
Additionally, the rise in crude Oil prices provide support for the commodity-linked CAD, given that Canada is the largest Oil exporter to the United States (US). West Texas Intermediate (WTI) Oil price rises to near $62.00 per barrel at the time of writing. The Oil producer group OPEC+, the Organization of the Petroleum Exporting Countries and its allies, decided to increase output by 411,000 barrels per day (bpd) in July by the same amount for the third successive month. The move came as a relief to markets expecting a larger increase.
The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is holding ground near 99.30 at the time of writing. US ISM Manufacturing Purchasing Managers’ Index (PMI) for May will be eyed later in the North American session.
On Friday, US President Donald Trump noted at a rally in Pennsylvania that he planned to increase import tariffs on steel and aluminum, which may put pressure on global steel producers and intensify the trade war. “We are going to be imposing a 25% increase. We’re going to bring it from 25% to 50% – the tariffs on steel into the United States of America, which will even further secure the steel industry in the United States,” he said, per Reuters.
