- USD/CAD will be confused at around 1.4430 at Late American Conference on Thursday.
- The US annual PPI inflation fell to 3.2% in February, softer than expected.
- The Canadian Finance Minister said the state agreed to maintain dialogue.
The USD/CAD currency pair weakened to approximately 1.4430 during the late American session on Thursday. The decline was influenced by lower US Treasury yields. However, a drop in crude oil prices may counterbalance losses for the pair, as the Canadian Dollar (CAD) is heavily tied to the commodity market. The preliminary Michigan Consumer Sentiment report, scheduled for release on Friday, is expected to provide further market direction.
US Growth Concerns Impact the Greenback
Investor sentiment surrounding the US economy has been affected by concerns about slowing economic growth, partly due to trade policies implemented by the Trump administration. On Thursday, the US Bureau of Labor Statistics reported that the US Producer Price Index (PPI) increased by 3.2% year-over-year in February. This marks a slowdown from January’s 3.7% rise and fell short of market expectations of 3.3%.
Meanwhile, the core PPI, which excludes volatile food and energy prices, increased by 3.4% in February, compared to 3.8% in January. On a monthly basis, the PPI remained unchanged, while the core PPI showed a slight decline of 0.1%.
Canadian Finance Minister Stresses Dialogue on Tariffs
Canada’s Finance Minister, Dominic LeBlanc, emphasized on Friday that tariffs are detrimental to both the United States and Canada. He underscored the importance of ongoing dialogue to mitigate the economic impact of these trade policies. Investors are closely monitoring developments related to US tariff policies, as any escalation could weaken the Canadian Dollar against the US Dollar.
Bank of Canada Implements Another Interest Rate Cut
On Wednesday, the Bank of Canada (BoC) announced a 25-basis-point reduction in its benchmark interest rate, bringing it down to 2.75%. This marks the BoC’s seventh consecutive rate cut. The decision followed US President Donald Trump’s introduction of new tariffs on Canadian steel and aluminum.
During a press conference, BoC Governor Tiff Macklem stated that the central bank would adopt a cautious approach to further rate adjustments. He highlighted the need to evaluate the impact of trade-related inflationary pressures and the potential dampening effects on demand.
Crude Oil Prices Influence CAD Value
Crude oil prices have declined due to persistent concerns over tariffs, which could negatively impact the Canadian Dollar. As the largest oil exporter to the United States, Canada’s economy is significantly influenced by oil price fluctuations. A drop in crude oil prices typically weakens the CAD, as reduced oil revenues can slow economic growth.
